Government adopts Draft Amendment on Law on Local Self-Government Financing – Less money for local self-governments from income taxes

The Government of Serbia has adopted the Draft Amendment on the Law on Local Self-Government Financing, which envisions the reduction of the share of municipalities and cities in income tax revenue.

Minister of Public Administration and Local Self-Government Ana Brnabic stated on Wednesday, August 17, that she expected that the draft amendment, the adoption of which was important for the International Monetary Fund, would soon be presented to members of the National Assembly.

Brnabic pointed out that the draft law envisioned the reduction of total income tax revenue paid to local self-governments from 80% to 77% for cities, and 74% for municipalities, whereas the remaining amount would go to the state budget.

She emphasized that the adopted draft amendment envisioned that Belgrade's revenue be reduced by the greatest amount – 66%. Belgrade will bear the brunt of the change, participating in the savings measures with two billion dinars.

Brnabic added that local self-governments wouldn't have to bear the burden of the saving measures of RSD 8 billion themselves, but only by RSD 4.8 billion.

The minister emphasized that income taxes won't be lowered, but redistributed between the Republic of Serbia and local self-governments.

The mayor of Belgrade, Sinisa Mali, said that he supported the amendment and that the city was prepared to accept even greater reductions. According to him, Belgrade has stabilized its public finances, pays its expenses on time and has stable income.

The mayor of Novi Sad, Milos Vucevic, said that the draft law was far better that the current one and emphasized that the city of Novi Sad would fare better under the new law.

– This has convinced us that the Government of Serbia is our partner. Local self-governments can't be exempt from the process of reforms being carried out on the level of the state. As for Novi Sad, we will fare better under the new law, as we will have around RSD 250 million less at our disposal in 2017, which is an amount five to six times smaller than that in the first draft – Vucevic said.

The president of the municipality of Vrnjacka Banja, Boban Djurovic, said that the Government of Serbia proposed to compensate for the reductions by supporting each development project of local self-governments.

Vlada Republike Srbije

Ministarstvo državne uprave i lokalne samouprave Republike Srbije

Međunarodni monetarni fond-MMF Beograd

Narodna skupština Republike Srbije

Grad Beograd

Grad Novi Sad

Opština Vrnjačka Banja

Law on Local Self Government Financing

income tax

Ana Brnabic

International Monetary Fund

Sinisa Mali

Milos Vucevic

Boban Djurovic