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B) Reread the text carefully and explain all figures used in it.

Slovakia

 

Major Sources of Revenue for the Local Government Budget

 

The principle sources of revenue available to local governments are local taxes and fees, revenues from municipal property, a share of centrally collected taxes and transfers from the central government.

Municipalities levy and collect the local tax and local fees. In a new system of national taxation introduced in 1993 the real estate tax was assigned to local governments. The real estate tax base includes land and buildings. The tax rate is based mainly on areas (square metres of different types of property).

Legislation currently provides Slovak municipalities with a total of eleven separate local fees which can be employed to generate local revenues. There are ceilings on the levels of fees which can be set, but these levels, and whether particular fees are imposed, are discretionary.

The sharing of revenues is regulated by law. Municipalities receive a share of the national government's total tax revenue, generally distributed on per capita basis. Which taxes are shared, and the proportions shared, are settled by the Act on the State Budget every year. In 1994 there were three shared taxes:

• a 29.92 per cent share of income tax on wages which is distributed to municipalities according to the number of inhabitants;

• a 5.87 per cent share of income tax of legal entities which is distributed to municipalities according to the number of inhabitants multiplied by a coefficient depending on the size of the municipality;

• a 30 per cent share of road (motor vehicle) tax collected for the tax administration area which is redistributed to municipalities within the area, the precise share for each municipality being equivalent to their share of the total population for the area. It is dedicated to the building, repair and maintenance of local roads.

The central state budget also provides specific subsidies to support certain activities in municipalities with up to 5,000 inhabitants. The amount of such subsidies is based on the size of population multiplied by coefficient of agricultural land quality. There are also subsidies from the central state budget for the operation of city public transport (in four cities only).

Formerly, there were substantial amounts of government aid for capital investment in infrastructure. Among these were funds for development programmes and for financing the completion of housing complexes begun before 1989. But at present, there are no specific capital grant programmes, except for city public transport (in the four cities), and ad hoc subsidies from specific state funds such as the State Environment Fund.

The share of subsidy payments to local governments in the state budget was 1.28 per cent in 1993. Municipalities may raise credit without having to apply for permission. They are able to borrow from the capital markets.

Local governments may finance capital expenditure through municipal bonds. Generally, there are two ways: either the municipality issues its own bonds, or a bank issues and sells municipal bonds and uses the proceeds to purchase the debts of the local government. In both cases the municipality guarantees the debt with its property.


Date: 2015-12-11; view: 885


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