Fiscal decentralization principles and local taxes in Lithuania

Abstract

The article aims to examine the possibilities to develop fiscal decentralization and the important part - the local tax authority in Lithuania. European Charter of Local Self 9 paragraph 3 states specified that "local authorities at least part of the financial re-sources received from local taxes and charges, which shall be determined by themselves in accordance with the Statute." Although this Charter is a member of the Lithuanian Republic, however, the provision cited here is not yet implemented. This paper discusses the concept of fiscal decentralization, its significance for the development of democracy. According to the statistical data analyzes municipal budget for fiscal decentralization in terms of income. The analysis showed, that non-tax income, which can be mostly influenced by local governments, comprises but an insignificant share of all local governments income and its significance is not great. The local taxes do not play an important role in municipal budgets too, because these taxes comprise but a small share of municipal budgets. The volume of state subsidies for budgets of local authorities comprises more than a half of their total revenues. This fact testifies rather a low level of fiscal decentralization in the country.