Bill on financing local self-governments presented

Serbian Minister of Finance Mladjan Dinkic said today that the Bill on financing local self-governments envisages fiscal decentralisation in which larger budgetary funds will be approved to poorer municipalities at the expense of the richer ones.

Presenting the bill in Serbian parliament, Dinkic said that the bill aims to enable a more even development of municipalities according to the so-called Robin Hood method, which is in line with European standards.

He said that the 99 poorest municipalities in Serbia will receive larger funds, 44 municipalities will get the same amount as so far, and the city will get fewer funds.

The Minister specified that out of this year’s total transfer worth 15.4 billion dinars, 2.2 billion dinars will be taken from the budget of four cities and directed to 99 municipalities, stressing that largest amount of funds will be taken away from Belgrade and Novi Sad.

Dinkic explained that the bill enables a more predictable planning of local budgets because a transfer of 1.7% of GDP per year will be guaranteed.

He said that this bill also envisages the formation of a commission for financing local self-governments that will be made up of six Serbian government representatives and five representatives of the Permanent Conference of Cities and Municipalities.

Dinkic said that property taxes will be the source of income for local self-governments, which will individually set the amount of the tax. However, that amount will not exceed a limit set by the Law on property tax.

He added that the bill also introduces the establishment of a maximum tax for communal fees. There will be 16 such fees at the local level.

The preparation of the Bill on financing local self-governments was supported by the Permanent Conference of Cities and Municipalities, and its implementation should begin as of January 1, 2007.