TIRANA, Oct. 4 – The Association for Local Government Autonomy and Tirana Municipality, the latter led by mayor and opposition leader Edi Rama, have signed a petition addressed to the country’s highest institutions complaining about the high tax burden central government is imposing on them. Speaking in an economic forum on “local government and support to business,” on Monday, Rama said government’s measures to lower tax burden on small businesses were cutting local government revenues in big cities, most of which are led by opposition Socialist Party mayors.
He said that hardest-hit category by what he called the “the economic, democracy and crisis” was the small businesses and entrepreneurs.
Denouncing the cash register and alleged price abuses for their installation, which led government to review the decision postponing it until next year and reimburse them, Rama said the difficult situation the small business is experiencing was also a result of frequent legislation changes. According to him, Albania’s tax system has been changed 60 times during the past 5 years, causing problems in entrepreneur-state relations.
In its petition, the Association calls on majority MPs not to approve new changes to the tax system which make the installation of cash registers and taximeters compulsory, and also cancel a government decision which lowered the VAT inclusion threshold to 5 million lek of annual turnover earlier this year, demanding that the threshold be put back to 8 million lek.
The association also demands legal measures fighting unfair competition and the granting of full tax and financial autonomy to all local government units.
The economic forum concluded that the international financial crisis has also been felt in Albania through falling demand for Albanian exports, lower foreign direct investment and immigrant remittances leading to economic slowdown, inflation hike and higher unemployment rates.
Local government revenue drop in H1
Total local government revenues in the first half of this year dropped to 270 million lek or 3.6 percent less than the same period last year, the Finance Ministry said in its recent local government budget analysis. Meanwhile, tax revenues also fell to 531 million lek, 7.7 percent less than the January-June period in 2009.
Data show local government units collected 7.4 billion lek of revenue in the first half of 2010 of which 85.6 percent in tax revenues and the remaining 14.4 percent in non-tax revenues.
Meanwhile, local government expenditure, municipalities and communes, in the first six months was 14.1 billion lek, 7 percent less than the same period last year, fulfilling their expenditure plan by 92 percent.
Small business tax had the biggest weight with 1.4 billion lek or 22.3 percent of the total, followed by legalization tax with 15.3 percent and cleaning tax with 13 percent of the total.
Municipalities collect 75.7 percent of total revenues followed by communes with 22.7 percent and regional councils with 1.6 percent, said the report.
Municipalities where the majority of population lives collected 5.6 billion lek followed by communes with 1.6 billion lek and regional councils with 122 million lek.
Local government units covered 52.6 percent of their expenditure with their own revenues while 47.4 percent was covered in transfers from central government budget.
Data show municipalities and communes spent more on social protection, pre-university education, housing and healthcare but less on economic issues and general public expenditure during the first half of this year.
The report said the fiscal performance was also affected by failure to approve new budgets by some local government units which had negative effects on investments.
Among the municipalities which did not approve their budgets in the first half of 2010 were also those of Tirana and Fier, the country’s biggest.
