Skopje, 6th June 2012 (MIA) – Macedonia has achieved significant progress in fiscal decentralization. A proof of this is increase of share of local taxes in GDP from 1% in 2006 to 1.5% in 2011. Only Plasnica Municipality, out of all municipalities in Macedonia, has not moved to the second stage of fiscal decentralization, however, it is soon expected for it to meet all requirements.
As regards the level of decentralization, Macedonia can be compared with the other EU countries, i.e. it has reached the international standard of decentralization, thus joining the group of decentralized countries. This was pointed out by the participants at the “"Social Services for Support of Social Development and Cohesion” Conference, organized by the Ministry of Finance and UNDP.
– Municipal revenues have quadrupled compared to 2005, when fiscal decentralization process was launched. In 2005, municipal revenues amounted to Denar 5.6 billion, while in 2011, they amounted to Denar 26.7 billion. Tax revenues, which the municipalities are authorized to collect, doubled in this period, Vice Prime Minister and Minister of Finance, Zoran Stavreski pointed out in his conference address.
He added that many measures were adopted in the past period, aimed at increase of own revenues of municipalities. – Percentage of VAT revenues has been increased from 3% in 2009 to 3.4% in 2010, 3.7% in 2011, 4% in 2012 and 4.5% in 2013. Revenues collected on the basis of sale of construction land are allocated in the following proportion – 20% : 80% to the municipalities, unlike in 2008, when the municipalities were allocated 40%. Revenues collected on the basis of concessions for mineral raw materials are allocated in the proportion 22% : 78% to the municipalities, while in 2007, municipalities were allocated 40%, Stavreski underlined, adding that from 2013 onwards, new revenues are envisaged for the municipalities from concessions for water resources for production of electricity, to be allocated in the proportion 50% : 50%.
Finance Minister also noted the possibility for access to the capital market through issuing municipal bonds as an important aspect for funding investment projects.
The Project, as he underlined, presents many models for determining the expenditure needs, the first goal being successful implementation of fiscal decentralization reforms by strengthening local revenue independence, which is of essential importance for the functions of municipalities. – Local revenue independence can be strengthened by modernizing tax policy and administration as regards property taxes and utility fees, taking into account that these revenues should become an increasingly important source of municipal revenues, Stavreski underlined.
He went on saying that both the Government and the local authorities still faced many challenges. According to him, efforts to fully register real estate on the territory of each municipality, as well as to revise property, should continue, thus increasing collection of stable own revenues of municipalities. So far, possibility for municipalities to determine tax rates within the legally set framework was used only by Gorce Petrov Municipality. This, as Minister of Finance said, show room within which the municipalities can operate. Effects on local economic development depends on the ability of municipalities to adopt planning documents, thus improving construction land management, which can be a secure source of revenues in future. It should be one of the priorities in the period to come. Possibility to improve local services through public-private partnership is not sufficiently utilized, Stavreski emphasized.
Mayor of the City of Skopje and Chairman of the Association of Local Government Units, Koce Trajanovski, said that all municipalities had adequate capacities to provide services to the citizens, adding that unequal development of municipalities in certain regions could still not be overcome.
– Municipalities have same competences, regardless of their size and capacity. They should offer their citizens services of equal quality. We are working on changes in the fiscal capacity for the purpose of implementing the decentralized competences, followed by appropriate distribution of funds, thus eliminating disparities among municipalities throughout the country, Trajanovski pointed out.
He added that Association of Local Government Units will further strive for increasing the percentage allocated to the municipalities on the basis of VAT to 6%, increasing block grants, timely and fully transferring the funds from central to local government, providing assistance and resolving the problems of blocked municipalities, more flexible conditions for bank crediting.
Jorge Martinez – Vasquez, director of Georgia State University International Center for Public Policy, underlined that Macedonia has made an impressive progress in the field of decentralization, however not with the same pace in all dimensions, and that it was a good time to evaluate the whole picture and to undertake reform steps for equalization and performances.
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