Determinants of financial independence of municipalities in the context of fiscal decentralisation
Keywords:
fiscal decentralisation, municipality, fiscal independence, revenue, determinants, Slovak Republic, Czech RepublicAbstract
The paper addresses the issue of municipal financial independence and the degree of self-financing within a group of selected municipalities from the Slovak Republic and the comparison of their levels and dynamics with municipalities from the Czech Republic. The quantification of the indicators expressing the level of fiscal decentralisation over a 5-year period, including a detailed analysis of the structure of the municipal revenues at both the absolute level and the per capita level, has made it possible to discover information which has allowed the designation of the determinants and factors which constitute the level of municipal financial independence or the municipal fiscal position. It has been shown that real estate tax, which is allocated to the municipal budget, does play an important role, albeit not a decisive one with regard to the formation of the municipality’s total revenues. Not even the options of using coefficients or tax rates to increase their budgets, which are open to the municipalities by law, have had a significant influence on the overall municipal revenues. The tax share designated in favour of each municipality as a share from the national gross tax revenue and grants and subsidies have become the municipality’s decisive sources of income. Relatively significant differences have been discovered at the level of the total income per inhabitant, as well as in the area of municipal financial independence within the researched group of 78 municipalities from the Slovak Republic and 81 municipalities from the Czech Republic. The paper analyses in detail the determinants or factors which have affected the levels of the given indicators.
References
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