GOLD Report I - UCLG

MIDDLE EAST / WESTERN ASIA214United Cities and Local Governments28. Figures provided bythe Bahrain FinanceMinistry.The system’s stumbling block is that localauthorities have no taxing rights, withthe exception of the tax on propertyownership, because they are members ofthe committee that fixes the tax base. Allthe rates, including those for the propertyownership tax, are fixed by thecentral government, in accordance witharticle 73 par. 3 of the constitution, whichstates that “All types of taxes and rightsare to be established by the law,” andthat the Council of Ministers can beempowered by law, and within the limitslaid down by law, to fix the exemptions,reductions and rates. Between 1980 and1990, the Constitutional Court deliveredseveral rulings which interpreted theseconstitutional provisions as meaning thetermination of any local authority taxingright.A bill currently under consideration predictsan increase in municipal and SPA revenuesas well as a real equalization; however, itstops short of granting taxing rights to thesebodies.In Lebanon, own taxation only reaches30% at best. However, the legislation since1992 has gone in the direction of reducingthis type of taxation, and replacing it withtaxes collected by central government –agood example of the political desire toweaken the municipalities. In Syria, localfinances can hardly be said to exist, as allpublic expenditure is included in the nationalbudget. Local governments receivefunding from central government for runningexpenses, to which unspent balancesare eventually returned (POGAR).Insufficient and haphazard resources. Oneof the recurring problems of the region’smunicipalities is the lack of resources,which prevents them from successfullycarrying out their functions. In Syria, Lebanon,Jordan, Palestine, and Yemen, themunicipalities are poor, or even very poor.In Jordan the total budgets of 99 municipalitiesincreased, in 2006, to 161 milliondollars.As we mentioned earlier, this is partly dueto weak or non-existent local taxing powers.The second problem is the low levelof state subsidies, which are haphazardand arbitrary. Most of the time, state fundingbarely covers operating expenses– sometimes not even that – in countriessuch as Jordan, Lebanon, and Palestine.This does not leave much leeway for investmentpotential or the financing of culturaland social activities. For that the municipalitieshave to rely on the good will ofwealthy locals (“evergets”) or people livingabroad. There are even local authoritiesthat are so deprived of decent resourcesthat the mayors are paid by central government,and all the services are providedby other bodies.Moreover, the financing of local authoritiesis under no circumstances considered to bea priority; services such as health, education,civil engineering, and water andpower supply, are run either by the ministriesor by centralized sector-based bodies.In Islamic Republic of Iran, the present lawon municipalities does not even mentionfinances. For that, the earlier law of 1982must be consulted. It is also perhaps interestingto note that in Bahrain’s annualbudget for 2006 28 , the items ‘Municipalities’and ‘Agriculture’ appear under theheading of ‘Miscellaneous,’ along with theupkeep of the royal stud farms.In Palestine, there was a slight improvementin 2002, since the mayors then obtainedthe right to collect directly taxes onfuels and road traffic, in addition to an educationtax, the only tax they were allowed tocollect directly until then. The PalestinianAuthority is supposed to pay back to themunicipalities 90% of these local taxes, butit does not do so. Result: the municipalitiesare becoming increasingly poor. Furthermore,Palestinian cities are not able tocollect taxes in the surrounding areas. Realistically,tax revenues can be collected onlyin villages, to which many people who nowlive abroad send money, or towns withlongstanding strong commercial activities.