The Palestinian Economy. Theoretical and Practical Challenges

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Proceedings “The Palestinian Economy: Theoretical and Practical Challenges” 269 The manner of fiscal transfers to LGUs of revenues collected by the central authority is regulated by article 26, according to which at least 50% of revenues collected by the central authority are to be transferred to local bodies from which they were collected. Transfer of the remaining revenues is to be decided by the cabinet as per recommendations of the Minister in light of the following considerations: • The number of residents of the local body. • The ratio of its participation in collecting the revenue. • Whether it has a special or particular status. • Whether it is entrusted to carry out duties beyond the local level, and • Its essential needs according to its developing plans (as approved by the MoLG). This article is very similar to the 1955 Municipalities Law, and the first four criteria are identical in the two laws. The fifth criterion in the LGL, however, is additional. The first criterion implies that distribution should be proportional to population, which might discriminate against small towns and villages. The second criterion is not clear, since the taxes in this regard are collected by the central authority and not by LGUs. The third criterion also lacks clarity and is determined by the ministry (e.g., according to the status assigned by the MoLG using, as at present, categories A, B, C, and D). The fourth criterion is understandable on the basis that the 1955 law allows a municipality to provide public toll services to local communities outside of its boundaries. However, there seems to be no such parallel provision in the LGL. There are two main differences between the LGL and the 1955 Municipalities Law. First, revenues according to the latter are limited to customs, fees for road transport and transport fines, whereas article 26 of the LGL does not refer to particular taxes but to all revenues. Second, the LGL allocates at least 50% of the revenues to the LGUs, whereas the 1955 Law does not reserve any minimum percentage for LGUs. Thus the current legislation seems to have intended an increase in LGU revenues. On the other hand, the current law limits the revenue generation capacity of the LGUs. In matters of deductions, payments, allotments and production of an annual budget, LGUs are required to obtain ministerial approval for their financial activities. In addition,
270 Zagha a final account report of the previous year must be submitted to the minister for approval within the first two months of the subsequent year. 40 The legislation on financial transfers to local authorities is articulated in article 26 of the LGL. It in fact constitutes the main new legal form in this regard. The same law provides that 50% of the fees and fines collected under the Transport Law shall be returned to the local authority within which they were collected, although details on implementation are lacking. The 1954 Property Tax law is still relevant within municipal boundaries. In addition, the legislation on Gaza still remains to be reviewed. The LGL provides that property tax shall be collected in accordance with the Property Tax Law within the Municipal Boundaries no. 11 of 1954. This means that the old system will continue to function under the new law. It is understood that the Ministry of Finance (MoF) has been retaining 10% of collected taxes to cover collection expenses and transfers the remaining 90% to the MoLG which, in turn, supposedly allocates the money to LGUs based on the criteria set forth in article 26 of the LGL. 4.1.5. Enforcement A main deficiency of the LGL is the lack of a comprehensive set of enforcement tools to enable LGUs to carry out their responsibilities. The only enforcement tool provided by the LGL is article 27, which is based on the 1955 Law and titled “Collecting of Local Authorities Revenues”. According to this article, in cases where due taxes and fees are not paid within a fifteen-day period, the council of an LGU will send notification requesting payment within fifteen days. The legislation provides for legal remedies against the request; an objection may be filed in court. If the due sum is not paid by the fifteen-day deadline, the council may order the sequestration and sale of movable property to cover the debt. The council may also order the withholding of one-fourth of the taxpayer’s salary. The issue here is that this provision deals with enforcement only in relation to property tax or fees. The LGL does not deal with enforcement of issues such as protection of landscape, parks, display of advertising, protection of the city or town’s appearance, prevention of health problems, food sale in designated areas and noise levels. Such issues 40 See articles 28, 30 and 32 of the LGL.
Page 1 and 2: The Palestinian Economy Theoretical
Page 3 and 4: © Gianni Vaggi - Marco Missaglia -
Page 6: VOLUME II
Page 9 and 10: 246 Zagha 1. Introduction The local
Page 11 and 12: 248 Zagha and groups in political d
Page 13 and 14: 250 Zagha drawbacks in the politica
Page 15 and 16: 252 Zagha it is not surprising that
Page 17 and 18: 254 Zagha economy (including expend
Page 19 and 20: 256 Zagha social norms sharply dist
Page 21 and 22: 258 Zagha Bird (1995) puts it, info
Page 23 and 24: 260 Zagha intergovernmental fiscal
Page 25 and 26: 262 Zagha low rate flat tax levied
Page 27 and 28: 264 Zagha need to be given access t
Page 29 and 30: 266 Zagha Such failures are found i
Page 31: 268 Zagha 4.1.3. The Relationship b
Page 35 and 36: 272 Zagha 4.1.6. Functions of LGUs
Page 37 and 38: 274 Zagha • Management of LGU ass
Page 39 and 40: 276 Zagha Figure 2: Local Governmen
Page 41 and 42: 278 Zagha In summary, what the data
Page 43 and 44: 280 Zagha on the cash basis. Almost
Page 45 and 46: 282 Zagha Figure 7: Business Opinio
Page 47 and 48: 284 Zagha within the Palestinian na
Page 49 and 50: 286 Zagha Table 5: Number of NGOs i
Page 51 and 52: 288 Zagha Fiscal decentralisation i
Page 53 and 54: 290 Zagha Burki, J., Perry, G., Dil
Page 55 and 56: 292 Zagha Palestinian Legislative C
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Assessing the Causes of Inequality
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424 Olivera provisions - in particu
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426 Olivera Figure 1: Economic Grow
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428 Olivera 3. Traditional economic
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430 Olivera costs and lower market
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