The realization of fiscal decentralization principle and local taxes in Lithuania
The realization of fiscal decentralization principle and local taxes in Lithuania

Summary/Abstract: The article deals with the possibility of developing fiscal decentralization and its main part – the institute of local taxes in Lithuania. General principles of tax distribution on the state and local government levels are discussed. The experience of contemporary democratic states and current situation in the sphere of local taxes of countries of European Union and other democratic countries is considered. The situation in the sphere of the local taxes in Lithuania and correspondence of the legal basis of local self-governments in Lithuania to the requirements of the European Charter of Local Self-Government is discussed. The budget’s structure of Lithuanian municipalities from the point of view of fiscal decentralization is analyzed. The analysis showed, that non-tax income, which can be mostly influenced by local governments, comprises but an insignificant share of all local governments income and its significance is not great. The local taxes do not play an important role in municipal budgets too, because these taxes comprise but a small share of municipal budgets. The volume of state subsidies for budgets of local authorities comprises more than a half of their total revenues. This fact testifies rather a low level of fiscal decentralization in the country. Similar situation is in the level of individual municipalities. The comparative analysis budget structures of the Vilnius and other capitals of EU countries showed that situation in Vilnius, Dublin, Riga and Tallinn municipalities is similar and characterizes by low degree of financial independence of municipalities. On the other hand budget structure of Paris and Warsaw municipalities indicates a high level of fiscal decentralization, which is much higher than that of the Vilnius municipality. The means are proposed that will enable us to develop the institute of local taxes up to the European level, i.e. the taxes allocated to the self-government to legalize as a local tax, rendering an opportunity to set its tariffs within the statutory limits and some new local taxes, could be legalized.

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