The new tax reform is a thorn in the side of many, and what is particularly interesting is that the new tax package brings greater autonomy to local self-government units. This was precisely the topic of the panel at the 15th annual meeting of mayors and entrepreneurs, or at the ’48 hours’ conference, where State Secretary of the Ministry of Finance Tereza Rogić Lugarić, Mayor of Koprivnica Mišel Jakšić, and Mayor of Dubrovnik Mato Franković spoke.
– Decentralization has been discussed in Croatia since 2001, and now there is a desire to seriously embark on this process and actually give greater autonomy to local self-government units for the first time – said the State Secretary, emphasizing several times that the Government of the Republic of Croatia wanted to make local leaders more autonomous.
– Local units will now have greater autonomy, and this is a step into new territory, but I would say that this will prove to be a very good thing because they will be able to adjust the tax burden – stated Rogić Lugarić, adding that local leaders are at a great advantage because they can recognize what their citizens truly want.
As much as these changes will be new, claims Rogić Lugarić, it will soon be evident that the system will function.
– The income tax can always be increased; perhaps at first, it will be a matter of getting used to it, but the starting point of this reform was a surplus in local budgets, so I believe this will work – said the State Secretary.
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The Mayor of Dubrovnik praised the tax reform when it comes to systematically granting powers to local self-government units, but he believes the problem arises when powers are given to cities while simultaneously ‘dipping into their wallets’ through other models.
– We must be correct, so if you give us rights and obligations, then allow us the rights and obligations for fiscal responsibility – said Franković, giving the example that the Government imposed higher salaries for firefighters that will be paid from city budgets, while both the state and counties also collect from the city treasury.
– I hope that through an upcoming meeting with the Prime Minister, we will be able to clarify what local self-government units want. We are often portrayed as local sheriffs, but we must not forget that we are always blamed for all unpaved roads, all broken pipes, delayed buses, broken streetlights, and so on. We must make unpopular decisions, and we must know that if you give us powers, then grant us full powers, not just partial ones – said Franković.
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One of the items in the new tax package is the ‘removal’ of surtax, which, according to the Mayor of Koprivnica, is not ‘fair’ because it is ‘the most socially concrete’. Jakšić agreed with Franković, stating that cities are always burdened while part of the financial resources also goes to counties.
– The Government should view cities as its partners. I do not understand how something will now be found for counties in this – said Jakšić, who noted that a big story is always made around tax reforms, but no one talks about how such decisions ‘play’ with the revenues of cities, not the state.
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While mayors are wondering how to finance and co-finance new projects that will improve life in cities, the State Secretary of the Ministry of Finance says ‘look at government bonds and treasury bills’, noting that cities can issue municipal bonds, which is ‘a very good way to finance capital projects’.
– Just as the practice started at the central level, it can also be done at the local level – said the State Secretary, noting that the surtax is not the fairest but rather the income tax, and besides bonds, she mentioned that public-private partnerships can always be established for projects.
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This extremely interesting panel, during which more space was sought, was preceded by a brief presentation by the Mayor of Dubrovnik on the topic of ‘Participatory Budgeting’, which allows citizens direct involvement in creating the city budget.
This system works by allowing citizens to propose projects, which city services review to determine their feasibility and then send them for further voting through the e-citizen system.
– Out of 233 project proposals, 131 were included in the voting, and a total of 1144 citizens voted through the Vox populi platform – explained Franković, who believes this system works because citizens understand they need to get involved, highlighting their project that will ultimately be realized.
– It is much easier for us to make decisions in areas where people engage through participatory budgeting – concluded Franković.
