engleski

THE IMPACT OF FISCAL AUTONOMY ON REGIONAL DEVELOPMENT IN THE REPUBLIC OF CROATIA

Fiscal autonomy as the ability of a local jurisdiction to generate sufficient public revenues from the local economy and independently determine how they will be spent, has become an increasingly frequent subject of discussion within national economies. However, the question arises as to the extent to which local government units in the Republic of Croatia have fiscal, i.e. tax autonomy. Previous research has shown that Croatian cities have a relatively low level of tax autonomy and only a limited number of cities can provide the current level of services to residents and entrepreneurs and manage their development without assistance from the government. This has enhanced their financial and political dependence on the state. Cities are the main drivers of development in counties and regions in the Republic of Croatia and thus the entire country. The Republic of Croatia is currently using the fiscal equalisation mechanism to help municipalities, cities, and counties. In 2020, out of 428 municipalities, 82 have not received fiscal equalisation payments. During the same period, 40 cities (out of 128) and 5 counties (out of 20) have also not received fiscal equalisation payments, as they ranked above average based on the calculation of the composite development index. The question is whether the state can further accelerate the growth and development of local and regional units with below average development level by a selective approach to increasing fiscal autonomy. Although the introduction of such a system, with local units that would implement it and systematically reduce the tax burden, would reduce their revenues in the short term, it would increase their taxpayer base by increasing their competitiveness and attracting labour (domestic and foreign), and create the conditions for more sustainable growth over the long term.

Cities ; Development ; Fiscal Autonomy ; Growth ; Tax Autonomy

nije evidentirano