Redistribution of the tax burden 2025 across regions and economic sectors

The analysis of the tax burden in Albania for 2025 reveals a complex and contradictory reality, where the fiscal system manages to generate increasing revenues, but at the same time produces pronounced sectoral, regional, and social inequalities. At its core, it is a model that performs well in collection but remains unbalanced in distribution.

At the regional level, the picture is clear and dominant, with Tirana remaining the absolute pillar of budget financing, contributing over half of total revenues (50.5%), while receiving only 37.8% of public expenditures.
This translates into a deep fiscal deficit of around –68.6 billion lek, or –18.5% of its contribution. In other words, the capital and the economy concentrated there function as net financiers of the rest of the country. Durrës follows a similar, but much milder pattern, being almost in balance.

On the other side of the spectrum, peripheral regions such as Dibra, Kukës, Gjirokastra, and Berat emerge, characterized by strongly positive fiscal balances reaching over +200%. This means that these regions receive far more from the budget than they contribute, reflecting a redistributive policy aimed at supporting less developed areas.
However, this redistribution remains structurally weak, as regional disparities continue to be significant and are not accompanied by sufficient capacities for local economic development.

Table 18[1]. Regional Fiscal Balance, Albania 2025

Region	% of total	Budget expenditures (bn lek)	% of expenditures	Fiscal balance	Balance (% of contribution)
Tirana	50.5%	302.8	37.8%	–68.58	–18.5%
Durrës	11.6%	79.5	9.9%	–5.86	–6.9%
Fier	4.7%	48.9	6.1%	+14.47	+42.0%
Elbasan	3.2%	41.7	5.2%	+18.18	+77.3%
Vlorë	3.3%	38.5	4.8%	+14.39	+59.7%
Shkodër	2.8%	32.9	4.1%	+12.49	+61.2%
Korçë	2.5%	31.3	3.9%	+12.77	+68.9%
Lezhë	2.3%	24.1	3.0%	+7.40	+44.3%
Berat	2.0%	24.9	3.1%	+10.50	+72.9%
Gjirokastër	1.6%	25.7	3.2%	+14.30	+125.4%
Dibër	1.4%	32.1	4.0%	+22.00	+217.8%
Kukës	1.3%	31.2	3.9%	+21.78	+231.2%
TOTAL	100%	801.694	100%	+67.994	+9.3%

When the analysis shifts to the sectoral level, the contrasts become even sharper.
Consumption sectors (trade and construction) bear the main weight of the tax burden, financing over 60% of revenues, while receiving only around 28% of budget expenditures. This pronounced disproportion indicates a structure that penalizes the most dynamic activities of the urban and consumption-based economy.

In contrast, productive sectors and infrastructure emerge as net beneficiaries, receiving more from the budget than they contribute. This is theoretically a sound policy choice for long-term development, but its impact remains limited.
Meanwhile, public administration is the largest net beneficiary, receiving 27% of budget expenditures.

Table 19. Distribution of Tax Burden and Expenditures by Sector, Albania 2025

Economic sector	% of tax burden	% of expenditures	Fiscal balance	Note
Trade & Services	35%	11%	–24%	Pays heavily
Construction & Real Estate	28%	17%	–11%	Pays heavily
Industry & Energy	12%	16%	+4%	Beneficiary
Agriculture & Livestock	4%	9%	+5%	Beneficiary
Tourism	8%	7%	–1%	Near balance
Transport & Logistics	6%	13%	+7%	Beneficiary
Public Administration & Public Services	7%	27%	+20%	Largest beneficiary

From a social perspective, the distribution of burden and benefits confirms a only partially progressive model.
The lower-income group is the largest net beneficiary, while the middle class bears the heaviest relative burden, positioning itself as the main contributor to the system without receiving a proportional return.

Table 20. Distribution by Population Segments, Albania 2025

Population segment	% of tax burden	% of benefits	Net balance	Note
Lower-income (<40,000 lek)	18%	41%	+23%	Largest beneficiary
Middle-income (40,000–120,000 lek)	55%	37%	–18%	Bears main burden
Higher-income (>120,000 lek)	27%	22%	–5%	Near balance

Overall, Albania’s fiscal system in 2025 displays a clear paradox: it is efficient in revenue collection but fragile in structure. The extreme concentration of revenues along the Tirana–Durrës axis creates high fiscal vulnerability, while dependence on VAT and social contributions shifts the burden toward labor and consumption. The increase in capital and social expenditures is a positive development, but their distribution remains unbalanced, failing to generate real convergence between regions or a sustainable economic transformation. In conclusion, Albania has a system that functions as a revenue-collection mechanism, but not yet as a development instrument. The main challenge remains the restructuring of the tax burden and a fairer orientation of public spending, so that economic growth becomes more inclusive and sustainable.

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[1] Extract from point 4.3 of Chapter 4 “Tax Burden in 2025 and Fiscal Outlook 2026 in WB6”