Financial autonomy of local self-government in Croatia

Abstract

The paper examines the notion and determinants of financial autonomy of local self-government in Croatia. The right to local and regional self-government as well as the competencies of local government units have been granted by the Constitution. Accordingly, the local government units are entitled to their own revenue, which they freely dispose of in performing their activities. However, financial autonomy is not clearly stated or defined, either at the constitutional level or at the statutory level. The primary source of local units’ revenues are taxes, followed by aid, ‘own source’, and earmarked revenues. The special emphasis of the paper is on ‘local’ taxes and the role of local government units in the formal aspects of financial autonomy, i.e. designing the local taxes’ notions and features. The paper also contains research on other local government units’ revenues, their legislative basis and normative design, and their role in local financial autonomy. Following the setting of the normative framework, the paper goes on to investigate the substantive aspect of fiscal autonomy, i.e. the fiscal role of local government taxes and other local revenue. The conclusions of the paper sum up the findings of the research and provide recommendations with the aim of making the system more sustainable in designing and achieving the financial autonomy of local government units in Croatia.