Municipal Fiscal Capacity in North Macedonia

Gruevski, Ilija and Gaber, Stevan (2023) Municipal Fiscal Capacity in North Macedonia. Journal of Economics, 8 (2). pp. 27-38. ISSN 1857-9973

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Abstract

The topic of fiscal capacity in Macedonian municipalities have become one of the essential aspects of local fiscal policy within the upcoming and currently stalled process of fiscal decentralization in N. Macedonia. It procures arguments that could enable independent and efficient process in collection of own revenues. The size of fiscal capacity would help significantly in creating efficient tax and budget policy in central and local government. It could also help in achieving larger independence from the central government, but also would help to achieve equalization in some financially endangered municipalities. Therefore, the fiscal capacity suggests that the tax collection is determined from tax capacity and capacity of the administration. Differences that appear in the collected own revenues are the reason for fiscal disparity. Fundamental part of the paper is the intention to determine the main methods of estimating fiscal capacity and to measure the potential fiscal disparity between some of the Macedonian communities. It considers the potential revenues of the municipality obtained under the current tax base with average tax effort. It is essential that the municipality controls those sources of revenue, such as the own revenues, common taxes and earmarked conditional transfers. Statistical data suggest that the discrepancies in fiscal capacity or collected real estate tax and development fee are predetermined from the differences arising from municipal tax base and the fiscal effort. Those variations are significant between urban, rural and city of Skopje. General transfers from the central government, especially VAT subsidies, can achieve to some extent equalization in the revenue discrepancies.

Item Type:	Article
Subjects:	Social Sciences > Economics and business
Divisions:	Faculty of Economics
Depositing User:	Stevan Gaber
Date Deposited:	28 Nov 2023 11:02
Last Modified:	28 Nov 2023 11:02
URI:	https://eprints.ugd.edu.mk/id/eprint/32647

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