Local Government Organization and Finance: Poland
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T A B L E 9 . 3 Structure of Revenues in Different Types of Local Governments, 2004 Counties (excluding cities Rural with county municipalities status) Regions
Municipal government Type of revenue
Cities with county status
Total (Zl million) 32,179.7 Own source (%) 35.4 Property tax (%) 13.8 Shares in central taxes (%) 27.5 General grants (%) 23.6 Conditional grants (%) 13.5
Other cities
22,783.1 38.6 18.6 18.7 28.1 14.5
17,524.8 26.6 13.1 9.8 48.2 15.4
12,554.7 11.7 n.a. 11.1 49.5 27.7
37,04.6 2.3 n.a. 55.9 18.1 23.7
Source: Author’s calculations based on financial reports of local governments. Note: n.a. = not applicable. Local government revenues do not include (a) most fees and charges for local services, which are collected by budgetary enterprises or other service delivery units, and (b) local borrowing and privatization of municipal assets, which are accounted as “sources to cover budget deficit, defined as total expenditures—total revenues” (Law on Public Finance).
As shown in table 9.3, in small rural governments, the local tax base is usually weaker, while in midsize towns and cities, the largest proportion of the total budget comes from own-source revenues. Property tax is the only important source of revenue. Tax on agriculture brings significant revenues, but only in rural areas (almost 4 percent of total revenues). All remaining local taxes make up insignificant shares in local budgets, usually less than 1 percent. (Tax on civil legal activities, which has a 1.4 percent share in total revenues, is an exception, but tax on vehicles brings in only 0.7 percent of revenues, and all other local taxes are less than 0.5 percent.) Compared with the situation in most other European countries, property tax revenues in Poland constitute a significant proportion of GDP (close to 1 percent). Although the share is considerably lower than in France, Spain, and the United Kingdom (especially if we include U.K. revenues from nondomestic rates, which do not constitute a local government tax), it is much higher than in most other European countries. It is more than twice as high as the share in the Czech Republic and about three times higher than in Hungary. The importance of property tax is greatest in midsize cities; it is much less important in rural communities—especially the smallest ones (see table 9.3). The relatively low significance of property tax in the budgets of the largest cities (cities with county status) is a result of the strong domination of state grants in county revenues.
