TIRANA, May 9 – A late 2015 nationwide campaign against informality and some new taxes and tariffs sharply increasing the tax burden in the bigger Tirana municipality following the 2014 administrative reform have sharply increased revenues in the country’s biggest local government unit.
Data published in the newly launched Open Data Tirana municipality portal shows municipal revenues hit a record 7.6 billion lek (€55.7 mln) in 2016, up 81 percent compared to 2015.
The sharp increase in income was a result of a hike in taxes levied on the use of public spaces, cleaning and advertising as well as the introduction of a new education infrastructure tax, sparking concern among businesses who staged protests and even undertook legal action to oppose the new taxes.
The controversial temporary education infrastructure tax brought the Tirana municipality an extra 496 million lek (€3.6 million) while advertising and cleaning tax collection almost doubled.
The new bigger Tirana municipality following the 2015 administrative reform has a resident population of some 557,000 and in addition to 11 Tirana municipal units also supervises 13 municipal units previously operating as independent communes. The bigger municipality has a surface of 1,100 km2 and population density of 502 residents/km2.
The territorial and administrative reform in force since Sept. 2014 ahead of the June 2015 local elections cut the number of local government units to 61 municipalities, down from a previous 373 municipalities and communes.
Small business owners staged protests in early 2016 demanding a review of the taxes on occupation of public space, buildings, advertising, education infrastructure and cleaning which increased by 2 to 10-fold starting this year. The Tirana Municipality reacted by revising only the tax on occupation of public space, but leaving in force all other taxes.
Starting 2016, the Municipality of Tirana has introduced a new tax on education infrastructure in a bid to reconstruct existing pre-school and school facilities and build new ones. The ‘temporary’ tax which will be in force for seven years ranges from an annual 1,800 lek (€12.7) for Tirana households to 4,000 lek (€28.4) and 37,000 lek (€263) for businesses depending on their size.
While the Tirana Administrative Court upheld the Tirana municipal council decision on the new taxes, in early March 2016, Albania’s Constitutional Court turned down a government heavy fines law increasing fines on tax evasion by up to 50-fold as running counter to constitutional principles. The new legal changes envisaged fines of 500,000 lek (€3,529) to 10 million lek (€71,000) on informality in apparent “disproportionate” penalties to income and offences committed.
The number of new businesses in the territory of the Tirana Municipality rose by 16,285 to a total of 55,700 at the end of 2016, almost half of all businesses operating in the country. The municipality says some 4,147 businesses filed to close down.
The higher income allowed the country’s biggest municipality run by Socialist Party mayor Erion Veliaj to increase investments to about 3 billion lek (€22.4 million), more than double compared to 2015 and increase staff to 1,710 employees at the end of 2016, up from 1,400 in the first quarter of the year.
The municipality plans to collect a record 14.4 billion lek (€106 mln) for 2017 of which about 1.9 billion lek (€14 mln) will be provided by the central government in a grant.
