2008年-世界发展银行全球_Albania_Local_Finance_Policy_Note___Programmatic_Public_Expenditure_and_Institutional_Review_38页_2mb

Summary of Albania Local Finance Policy Note

Core Content

This policy note provides an analysis of the local government finance system in Albania, highlighting key reforms, challenges, and recommendations made since 2000. It addresses issues such as revenue sources, tax assignments, intergovernmental transfers, and the implications of decentralization on local financial sustainability.

Main Points

1. Overview of Local Government Finance

• Reforms: Albania has undergone significant reforms in its local government finance system since 2000, moving from a system of ambiguous functions and tightly controlled earmarked grants to one with clearer functions and more autonomy in fund allocation.
• Functions: Local governments are responsible for a range of functions, including urban housekeeping, infrastructure, and administrative tasks.
• Social Sectors: Social assistance is the largest expenditure category, funded through earmarked grants. Education and health are shared functions with the central government, while local governments handle classroom construction and operating costs.
• Urban Services: Local governments manage urban infrastructure, including roads, solid waste, and parks. Tirana spends about 20% of its discretionary budget on these services.
• Administrative Functions: These include general public services, which encompass personnel management, financial administration, and tax collection. In 2006, this category consumed 37% of local discretionary spending.

2. Do Local Governments Have Enough Money?

• Current Spending: Local government spending as a percentage of GDP is the lowest among European comparator countries.
• Revenue Share: Local governments derive about 43% of their discretionary revenues from taxes and fees, and 48% from unconditional transfers.
• Recommendation: Increasing local revenues is not justified given the current responsibilities and the fact that local spending is not significantly underfunded relative to European standards.

3. Changing Tax Assignments

• Small Business Tax: The primary local tax, which is inefficient due to limited taxable activity per taxpayer.
• Property Tax: Increased to 100% in 2003, but it only contributes 5% to local discretionary revenues in 2007.
• Personal Income Tax: Not assigned to local governments, as the tax base is highly concentrated in Tirana.
• Recommendation: Consider increasing the yield of the building tax and improving collection efficiency. Long-term, local governments could be given a share of personal income tax, but this is not feasible in the short term.

4. Fine-Tuning the Transfer System

• Unconditional Grants: Account for about half of local revenues. The distribution formula is based on population, land area, and road length.
• Equalization: Not strongly justified for Albania due to the central government's role in funding major social sectors.
• Earmarking: Used for specific functions like social assistance, but may need refinement.

5. Further Decentralization

• Water Companies: Decentralization is ongoing, and local governments may face financial challenges due to the phase-out of operating subsidies.
• Recommendation: The government should impose a fixed ceiling on operating subsidies and gradually reduce them to encourage efficiency.

6. Financing Municipal Capital Investment

• Competitive Grants: Used to fund capital investments in four sectors: roads, water supply, education, and health.
• Issues: Over-approval of projects, leading to partial funding and delays. The system could be improved by tightening evaluation criteria and fully funding approved projects.
• Recommendation: Reconsider the geographical distribution of grants to align with national priorities.

7. Municipal Borrowing

• New Law: Introduced in 2007, imposing quantitative controls on local borrowing.
• Aggregate Debt Ceiling: Set at 60% of GDP, with a short-term cap of 3% of GDP due to the restrictions.
• Recommendation: Further regulations may be needed to determine the local share of the aggregate debt limit.

8. Long-Term Organizational Changes

• Regional Governments: Lack clear functions and may be redundant.
• Consolidation of Small Communes: Proposed, but international experience suggests limited efficiency gains and high political costs.
• Recommendation: Consider alternative solutions such as inter-municipal agreements and joint service companies before consolidation.

Key Information

• Currency Unit: Lek (LEK), with 1 US$ = 79.0 LEK.
• Fiscal Year: January 1 to December 31.
• Key Institutions:
  • ADF: Albanian Development Fund
  • GDWS: General Directorate of Water and Sanitation
  • MOE: Ministry of Education
  • MOF: Ministry of Finance
  • MOI: Ministry of Interior
  • KEH: Albanian Power Corporation
• Tables and Figures:
  • Table 1: Average population of municipalities in comparator European countries (Albania at 8,400).
  • Table 2: Sources of local government discretionary revenues in 2007 (Unconditional transfers at 48%, local taxes and fees at 43%).
  • Table 3: Indicators of variations in per capita discretionary revenues.
  • Table 4: Current operating subsidies to water companies.
  • Table 5: Budget allocations for competitive grants.
  • Table 6 and 7: Performance and need indicators.
• Boxes:
  • Box 1: Unconditional Grant Distribution Formula (2008) – detailed breakdown of how grants are allocated.
  • Box 2: Property Tax Administration Challenges – highlights the need for better technical standards and enforcement.
  • Box 3: Operating Subsidy Calculation for Water Companies – outlines the process and potential reforms.
  • Box 4: ADF criteria for evaluating municipal infrastructure projects.
  • Box 5: Controlling Arrears – discusses the importance of managing debt and financial obligations.

Conclusion

The report concludes that while Albania has made progress in local government finance reforms, several issues remain. These include the need for more efficient tax systems, clearer transfer rules, and effective management of decentralization impacts, particularly in the context of water utilities and infrastructure investments. The recommendations focus on improving financial sustainability, enhancing transparency, and aligning local responsibilities with appropriate revenue sources.