Edis Felić: Due to Violation of the Law, the Entrepreneurship Promotion Program Has Been Canceled

A few weeks ago, I wrote about the illegal decision of the City of Otočac to penalize all those who use public space without the approval of local authorities with a so-called punitive tax, as the local city fathers expressed it. And this tax is ten times higher than what people and companies normally pay when they properly submit a request for the use of public space. Now, an example of ignorance of local regulations comes from my otherwise beloved and beautiful Mali Lošinj.

Just to remind, in Otočac, they made an illegal decision to introduce a ‘punitive tax’, instead of simply amending the already existing completely legal Decision on Public Order by tightening the still low fines. This is not the first time we write about the ignorance of local authorities’ regulations, and in this case, the High Administrative Court (VUS) annulled the Program of Measures for Promoting Entrepreneurship in the City of Mali Lošinj for the period 2018 – 2020 nearly three years after its adoption (September 2018) based on a submission from the company F. T. j.d.o.o. Namely, the program was adopted by Mayor Ana Kučić, but the company F.T. challenged her authority to adopt such an act.

Expanded Competencies

The Mayor, as stated in the ruling, dismissed such claims arguing that the Program was ‘sent for approval to the Ministry of Finance, along with annual reports on the allocated subsidies for 2018 and 2019, and the Ministry accepted both the Program and the reports’, thus considering the act valid. She adopted the Program, she stated, based on Article 48 of the Law on Local and Regional Self-Government (ZoLP(R)S), which indeed prescribes the competencies of the mayor.

However, that article states that the mayor ‘prepares proposals for general acts, executes or ensures the execution of general acts of the representative body, manages the revenues and expenditures of the local or regional self-government unit, decides on other disposal of property in accordance with this Law, the statute of the unit, and special regulations, and more’. In this case, what is important is what was first mentioned – preparing proposals for general acts, executing or ensuring the execution of general acts of the representative body. Admittedly, perhaps the mayor meant paragraph 2 of Article 48 of the ZoLP(R)S, which states that the head of the municipality or city can decide on the amount of individual value up to a maximum of 0.5 percent of the revenue of the local self-government, but in this case, the amount is still greater than the mentioned limit.

The decision to adopt the Program, considering the competencies regulated by the ZoLP(R)S (Article 35), should have actually been made by the City Council of Mali Lošinj, not the mayor, as stated in the ruling. Namely, the city council is the one that decides on the disposal of funds, which ‘is regulated by numerous regulations and supervised by central state bodies and the European Commission’ because it concerns significant state subsidies ‘which also include subsidies within the competencies of local self-government units’.

Harmed Herself and Entrepreneurs

Finally, according to the Law on Incentives, state subsidies must be aligned with the National Rural Development Program and the European Union rules on state aid, and since part of the subsidies from the Program relates to the implementation of rural development measures, local self-government units can only implement them if they have been approved by the Ministry of Agriculture and the European Commission. From the mayor’s statements, it is clear that before the adoption, the Program was not submitted to the Ministry of Agriculture, but to the Ministry of Finance, which indicates that the procedure for adopting the Program was also violated.

Therefore, the VUS annulled this program of measures for promoting entrepreneurship. Here, I do not comment on the Program, which may be good, although I have read some objections. The problem here lies in the fundamental ignorance of the legally regulated procedure. The issue is also that all previous procedures for allocating funds will be annulled. And the question is how to return the money from those to whom it was allocated since they have certainly spent it. Thus, due to a foolish mistake, both the City of Mali Lošinj and the mayor have created problems for themselves as well as for local entrepreneurs.

Post scriptum:

The company F. T. stated, among other things, that in Article 12, the Program is discriminatory because it states that a natural person who is an employee of the City of Mali Lošinj or a member of the Commission for the Allocation of Subsidies cannot realize the right to support, nor a person who lives in a common household with an employee of the City of Mali Lošinj or a member of the Commission… The mayor, however, believes that without this, ‘all employees of the city administration and their family members could apply for the subsidy allocation competition and thus be privileged compared to others’. I think she is right in this regard.

{embed_digitalno_izdanje}{/embed_digitalno_izdanje}