The own municipal revenues are financial assets that are collected from taxes, fees, fines, payments for public services provided by the municipality, rents from real estate owned by the municipality, revenues from the sale of municipal assets, revenues from municipal enterprises, and from income from co-payments from services in education and health, etc.
Municipalities collect their own revenues in two forms: as revenues collected directly by the municipality as an activity of the municipality and as revenues collected from the central level (hereinafter, indirect revenues) which are transferred to municipalities as an integral part of own revenue.
Property tax is considered a very important source of income and one of the most stable categories of municipal revenues. The Municipal Assembly sets property tax rates on an annual basis at the tax rate of 0.05% to 1% of the market value of the property. It is important that the revenues collected by the municipalities are returned to the citizens in the best possible way of providing the best and highest quality services.
In Kosovo, the fiscal burden has been increasing year by year.
If we analyze the collections from the local government according to the municipalities that are an integral part of 7 regions, it is noticed that the highest burden is borne by the citizens of Prishtina region with a local tax burden of 148 Euros per year, as well as those of Gracanica with 135 Euros per year. These two municipalities have their own per capita income more than double that of other municipalities in Kosovo.
Although the tax burden decreases when the tax base increases, this has not happened in Kosovo. The regions of Prishtina, Prizren and Mitrovica have the highest population. But, apart from Pristina, the other two regions do not bear a justified burden based on the argument of a broad tax base. From this point of view, the analysis states that the levels of local tax administration should increase their capacity to take advantage of opportunities to increase local revenues.
A look at the distribution of the local tax burden shows that the first problem is the low capacity of local tax administration.
Meanwhile, the unequal distribution of the local tax burden is explained to a certain extent by the concentration of consumption and the non-harmonized trade industry in all regions. An influential factor is also related to the distribution of consumer goods and services, which tend to be consumed outside the area where they are created or produced for export or in densely populated areas.
But the problem that is still not being narrowed is evasion, which comes from an unchanged informal economy even though revenues grow from year to year. But this increase in revenue is not due to the battles won against evasion, but mostly as part of the taxation that corresponds to the expansion of the economy, as well as the reflection of inflation.
The highest percentage of non-taxed services is one of the most acute and massive problems for the Kosovo market.
The fight against tax evasion should be the main focus of fiscal policy, as the missing part should not only be a way to increase government revenues, but also be a way to increase the equality of the tax system for taxpayers. This war will dictate even more complete transparency and a need to improve the reliability of the tax system for citizens and businesses.
All revenues collected in a municipality belong to it and become part of the municipal budget.
The list of municipalities and detailed information could be found in Tax Burden 2020 publication