site.btaFinance Minister Wants Functional Decentralization of Municipalities

"The direction I want us to go is towards a functional decentralisation of municipalities. We need to empower municipal authorities to make more decisions at the local level," Finance Minister Assen Vassilev said at a working meeting with the leadership of the National Association of Municipalities in the Republic of Bulgaria (NAMRB). The draft State Budget Act for 2024, the proposed changes in the tax legislation and the upcoming initiatives and projects of the municipalities financed by the National Recovery and Resilience Plan and the programme for financing municipal investments were discussed at the meeting, Vassilev's Ministry reported here on Friday. 

As a step in the direction of financial decentralization, from the beginning of next year, about BGN 100 million will remain to be managed by municipalities. These are the expected revenues from the patent tax, which will be formed by two components - the increase in the patent tax itself and the catering establishments that will be paying it. This will provide municipalities with more resources to manage themselves, Vassilev said. According to him, all revenues from crafts and related services should gradually be transferred to the municipalities. 

The NAMRB raised as a major problem for the local authorities the amount of the general equalization subsidy planned in the next year's budget.

It should also compensate for the costs related to the increase of the minimum wage from 1 January 2024. It was agreed that the amount of the subsidy should be increased from BGN 404 million to BGN 470 million to allow municipalities to implement their local policies for the benefit of the population.

The representatives of the municipalities expressed their gratitude for the kept promise to allocate each year BGN 1 billion from the budget to finance municipal projects, as well as for the introduced standards in education and health.

The question of the amendments to the Local Taxes and Fees Act, proposed by the NAMRB, was also raised at the meeting. The Ministry of Finance supports the initiative of the local authorities as the amount of local taxes and fees has not been updated since 2010.

The discussion focused on the implementation of the programmes on digitisation of archives, sanitation, street lighting and increasing security through video surveillance in smaller settlements.

The working meeting was also attended by Deputy Minister of Finance Georgi Klisurski, NAMRB Esecutive Director Silvia Georgieva, among others.