GOLD Report I - UCLG

105losing their local, own sources of revenues.The Law of December 21, 1991 “On Fundamentalsof the Tax System” provided for 23kinds of local taxes and duties. Even so, in1998 they yielded on average 12% of the totalmunicipal revenues. Furthermore, local authoritiescould vary the rates within narrow limitsfor only eight of the 23. The same number oflocal taxes and payments was preserved bythe initial version of the Tax Code of the RussianFederation enacted on July 31, 1998.Later this list was reduced to five in 2000. Withthe amendments of 2004 to the budget code,proposals to transfer the tax on vehicles tomunicipal budgets and to establish a local taxon retail sales were rejected, and two localtaxes remain –the land tax and the tax on personalproperty.In Ukraine, bodies of local self-governmentmay establish, in accordance with law, localtaxes and duties, which are allocated to appropriatebudgets. Meetings of citizens may introducelocal duties on the principles of voluntaryself-taxation. In 2005, local taxes and dutiescomprised 2.4% of the general revenues oflocal budgets.Local bodies in the states of Central Asia arenot permitted independence in the tax andbudget spheres. They are not able to definetax rates or other elements of local taxation.Tax rates and other elements of taxation areprescribed by central bodies for all taxes,including local levies. In Uzbekistan, the Cabinetof Ministers establishes local taxes andtheir rates. In Kyrgyz Republic, local taxes andduties may be introduced only by the Parliament.On the whole, local taxes account for aninsignificant share in the revenues of localbudgets.Tax shares. In all countries of the region, taxshares accrued to local government on therevenue from national taxes are the mainsource of revenue for local budgets. This isgenerally a share of the local yield of the nationaltaxes.In Kazakhstan, law does not provide for a divisionof taxes between the republic and localgovernments. Local budgets receive 50% ofthe income tax on corporate entities, and 50%of the excises levied on certain specifiedgoods. Income tax on personal property,social, land and transport taxes, and paymentsfor the use of water and forest resourcesare wholly directed to local budgets.Certain kinds of duties are also considered taxrevenues.Reinforcement of the revenue base of localbudgets is exercised by increasing the share oftaxes left to local budgets at the expense ofstate taxes; such is the case in Uzbekistan andKazakhstan, for instance. In Belarus, the shareof state taxes and duties makes up morethan 14% of local budget revenue. In Ukraine,since the adoptions of a new budget code in2001, the personal income tax is fully devotedto local budgets of the respective levels (province,district, municipality) in proportionsfixed by the law.Since Russia is a federal country, the bulk oflocal budgets depends on the budget and thepolicy choices of the subjects of the Federation,within the framework designed by theBudget Code. The tax base of the subjects ofthe Federation has been strengthened in 2004and 2005 with the transfer of the transportationtax and of the tax on assets of legal persons.Part of the current revenues of thesubject has to be reallocated to local budgets.Laws of the subjects of the Federation grantadditional assignments of tax revenues fromregional budgets. As a rule, such assignmentsare to be made at uniform rates, except thatdifferential assignments may be established incases provided by law for the period from2006 to 2008. In 2005, assignments of taxescomprised 36.7% of local budget revenues.The share of local budget revenues of the totalbudgetary funds of the Russian Federation(including regional and local) comprises 10%.Budgetary transfer. Transfers have twomain functions:· bring revenues in line with spending requirementsto accommodate disparities in therevenue base and in needs,· compensate the costs of duties assigned toLocal bodies in thestates of CentralAsia are notpermittedindependence inthe tax and budgetspheres