The construction boom returns, local tax collections increase by 60% in 4 months

2024-05-23 07:33:00, Ekonomi CNA

The budget revenues in the first 4 months of the year recorded an annual increase of 11.6%, but detailed data from the fiscal indicators refer that a major contributor was local taxes to the local government.

During the period January-April 2024, 11.1 billion ALL were collected in the local tax item in the budget, a value that is 60% higher than the same period of 2023. The value of the collections has set a historical record, it is the most high in the history of the transition.

The main source of municipal income from local taxes is the infrastructure impact tax (which applies to permits for new constructions).

Another factor is related to the change in reference prices in July last year. The increase in the reference prices of apartments for Tirana, not only increased the obligation of citizens for the building tax, but gave an immediate effect on the costs of the construction activity, since the value of the infrastructure tax is determined on these prices.

Recently, the Association of Builders has asked the Constitutional Court for the partial annulment of the decision approved last July with the increase in reference prices. The first public hearing is set to take place on June 18, 2024.

During 2023, about 63% of the weight for the item of income from taxes and local government taxes was maintained by the infrastructure impact tax, according to the data of the report of the Institute of Municipalities of Albania, against the weight of 55% that it took in 2022.

In total, the revenues of 61 municipalities from their own resources (including local taxes and fees, and other local revenues) for 2023 reached 350 million euros. Compared to 2022, revenues increased by 11%.

There were more collections for 2023 from the infrastructure impact tax, which reached the value of 13 billion ALL for 2023. Compared to 2022, the income from this tax increased by 28.3%.

The impact of the reference prices was also reflected in the tax revenue on buildings by about 43% in the first 4 months of 2024 in relation to that of 2023.

The Ministry of Finance reported that, in January-April 2024, 3.1 billion ALL were collected, or about 960 million ALL (9.4 million euros) more than last year in the first 4 months.

Municipalities represent the level of governance closest to citizens, with potential influence on the identification and selection of the needs of the communities they represent.

But despite the new Territorial Reform, which transferred a series of services and finances to locals, services to communities have deteriorated in some cases, as financial administration and budgeting have been based on an unsustainable development model and municipal revenues have created dependencies from building permits./ Monitor magazine