THE FINANCIAL POLICY OF A LOCAL SELF- GOVERNMENT IN POLAND AND THE REPUBLIC OF SLOVAKIA

Transcription

1 Halina Łapiska* THE FINANCIAL POLICY OF A LOCAL SELF- GOVERNMENT IN POLAND AND THE REPUBLIC OF SLOVAKIA Summary The main task of a local self-government unit is to provide for collective social needs. For this reason effective and efficient management of financial resources, providing appropriate access of local communities to public goods and services should be a fundamental target of the financial policy of a local self-government unit. Additionally, such services should be rendered at the highest possible level 1. Management measures at the disposal of local governments must be compatible with assignments and social expectations, both in Poland and the Slovak Republic. The purpose of this article is to provide financial policies of local governments in Poland and the Slovak Republic. Determine the similarities and differences in this area be on the basis the law and literature studies. keywords: local self-government unit, public finances, local finance, budget Introduce A process of the public administration decentralization, taking place since nineties, forced decentralization of the public finances. The commune self-government, reactivated in 1989, was burdened with numerous tasks, of which an aim is to ensure the best possible conditions of living of a local community. In order to implement those tasks it was necessary to provide the commune self-governments with essential financial means. A subsequent step to increase local autonomy was to introduce self-governments of districts and provinces in A three tier system of local self-government bodies was formed. A scope of duties of the local self-government units and an amount of financial means being at their disposal were increased at the same time. The public administration reform and decentralization of the public finances are * Dr Halina Łapiska, asystent w Katedrze Bankowoci i Finansów Wyszej Szkoły Finansów i Prawa w Bielsku-Białej. 1 M. Dylewski, Planowanie budetowe w podsektorze samorzdowym. Uwarunkowania, procedury, modele, Warszawa: Difin, 2007, s

2 a consequence of the political system changes in Poland, which were initiated by political changes in The changes implemented do not only result from processes of an internal character taking place but they depend on external factors as well civilization and cultural processes of globalization or regionalization. The purpose of this article is to provide financial policies of local governments in Poland and the Slovak Republic. Determine the similarities and differences in this area be on the basis of existing legislation and literature studies Like in Poland, as in the Republic of Slovakia the transformation process in the scope of the local autonomy had a complex character. A two tier system of local self-government units was established, that is: communes and higher territorial units self-governing provinces. There were also changes in the system of the public finances in order to increase financial autonomy of a local self-government. An implementation of a tax reform, which became a basic element of the decentralization of the public finances of Slovakia, was an important stage of the transformations. 1. The Polish system of the local self-government financing The process of the political system changes, taking place since 1990, caused, among others, reactivation of a local self-government and began decentralization of public finances. When a local self-government became an important form of a public life organization at a local level, it was necessary to secure legally sufficient financial resources for its activity. A budget and sources of its revenues play the main role in the local self-government finances like in a case of the state finances. It results from the fact that operating of a local self-government and organization units connected with it is based on an annual budgetary plan. It is an important factor shaping financial relations with other units included in the system of public finances, and also entities out of this system. Principles of financial economy management (accumulation of revenues, expenditure of means, realization of tasks etc.) by local selfgovernment are based on supra-legal budget law sources: the 27

3 Constitution of the Republic of Poland 2 and the European Charter of Local Self-Government, and also on legal norms: The act of public finances dated 27 th August 2009, The act of revenues of local self-government units dated 13 th November 2003, The act of a commune self-government dated 8 th march 1990, The act of a district and province self-government dated 5 th June 1998, The act of regional clearing houses dated 7 th October Other legal acts connected with the local self-government economy are: the act of communal economy dated 20 th December 1995, the act of public procurements dated 10 th June 1994, the act of General Accounting Chamber dated 23 rd December 1994, the act of employment and counteraction against unemployment dated 14 th December 1994 and executive acts to acts and local enactments. Executive acts include all regulations of competent Ministers, e.g. a disposal of Minister of the National Education regarding division principles of a part of a general education subsidy for local self-government units dated 29 th December Local enactments include, among others, budgetary ordinances of commune councils or commune council ordinances regarding management of the financial economy by auxiliary self-government units within a framework of the commune budget 3. Within a framework of progressing process of the public finances decentralization there was transition of tasks and discretionary powers with financial means from a central level to a local level. Sources of financing of local self-government tasks were guaranteed by law. Budget revenues of local self-government units are specified in the legal act of 13 th November 2003 the act of revenues of local self-government units. It defines sources of own revenues of self-governments at a commune, district and province level, a method to calculate shares in income taxes form physical and legal persons due to local self-governments and it specifies principles to calculate amounts of subsidies and to obtain subsidies from the state budget. It presents regulations regarding state budget burdens, which local self-governments, having revenues higher 2 Konstytucja Rzeczpospolitej Polskiej z dnia 2 kwietnia 1997 r., Dz. U. Nr 78, poz E. Rukowski, Finanse lokalne w dobie akcesji, Warszawa. Dom Wydawniczy ABC, 2004, s

4 than average national income per one inhabitant, are obliged to bear, Table 1. Table 1 Revenues of the Polish local self-government units Types of revenues Taxes Charges Shares in state taxes Other revenues COMMUNE DISTRICT PROVINCE Own revenues General subsidy Target subsidies (from the state budget) Non-repayable means from foreign sources, from the EU budget Other means specified in separate regulations Own revenues Agricultural tax, forest tax, vehicle tax, real estate tax, tax on civil law transactions No applicable No applicable inheritance and endowment tax, tax card Stamp duty, stall market fee, market toll, spa fee, No applicable No applicable operating fee Shares in the income tax from physical persons PIT. Shares in the corporate income tax - CIT Incomes, payments of institutions of budget economy organization units, Inheritances, legacies, donations, Incomes from property of a local self-government unit, Incomes from financial penalties and fines, 5% revenues from tasks commissioned, Interests on loans and means on bank accounts, Interests on overdue payments, Subsidies for other local self-government units and other revenues due on a basis of separate regulations Source: own elaboration on a basis of 4 Those revenues consist of: own revenues, general subsidies, and target subsidies from the state budget, non-repayable means from foreign sources, means from the UE budget and other means specified in separate regulations. A commune self-government has the highest own revenues, because only the budget of the basic level of the self-government is supplied by taxes and local charges. The self-governments of all levels 4 M. Mackiewicz, E. Malinowska-Misig, E. Misig, M. Tomalak, Budet i finanse Poradnik dla samorzdów, MUNICIPIUM SA, Warszawa, 2007, s

5 have shares in central taxes and also property revenues, donations, subsidies and so called revenues from other titles. 2. The local self-government financing system in the Republic of Slovakia Activities of the government began by the resolution of 11 th April 2000 regarding the public administration reform 5 had a significant influence on the local finances system in force in the Republic of Slovakia. Since 1 st January 2002 pursuant to act no 416/2001Z.z regarding transferring some activities from the state administration bodies to communes and higher territorial units a process of transferring of powers form the state bodies to local self-government bodies has begun. Therefore, it was necessary to decentralize public finances to adjust them to a new division of public tasks. An important change was a movement from assigning budget state subsidies to local selfgovernments to their financing within their own powers by tax revenues. The financial decentralization in Slovakia caused a principal change in financial-economic relations between particular links of public finances. Legal norms specified a way of financing and a budgetary economy of a local self-government, financial relations between the state budget and budgets of local self-governments and between budgets of local selfgovernments and other physical and legal persons in details 6. Implementation of the following legal acts was important for a change in the financing system of self-government: Acts no 564/2004 Z.z. about budget assignment of income tax means to local self-government and an amendment and extension of use of some acts, Act no 582/2004 Z.z. about local taxes and charges for municipal wastes and small building wastes, Act no 583/2004 Z. z. about rules of budgeting of local selfgovernments and an amendment and extension of some acts, 5 V. Babak, Zaklady finanneho prava, ast. Koszyce, 2001, s. 8. za: Władza i finanse lokalne w Polsce i krajach ociennych, red. E Rukowski, B. Dolnicki, Oficyna Wydawnicza Branta, Bydgoszcz-Białystok-Katowice 2007, s S. Štofko, Fiškálna decentralizácia - súas reformy verejnej správy. [w:] Rozwój Euroregionu Beskidy IV. Samorzady i fundusze unijne tworzenie ramowych warunków rozwoju. Bielsko-Biała, WSBiF, 2006, s

6 Act no 523/2004 Z.z. about rules of budgeting of the public administration and extension of some acts, Government acts 668/2004 Z. z. about a division of income tax means among local self-governments. The financing system of the Slovakian local self-government units is presented in Table 2. First of all, own revenues are the main source of financing, and they include, among others, taxes and local charges, revenues from property, a business activity conducted, and also penalties for breaching a financial discipline imposed by a local self-government. Table 2 Sources of revenues of Slovakian local self-government units Own revenues Shares in state taxes Subsidies Other revenues Non-budget monetary funds COMMUNE HIGHER TERRITORIAL UNIT Revenues from taxes and local charges Non-tax incomes from property title and a transfer of property title and activities of a commune and higher territorial units and its budgetary units. Proceeds from financial means of a commune/ higher territorial unit Penalties for breaching a financial discipline imposed by a commune or a higher territorial unit Voluntary donations and collections for a commune and a higher territorial unit Shares in state taxes Subsidies from the state budget to cover costs of realization of tasks in a scope the state administration, subsides from the target state funds, Other subsidies from the state budget Target subsidies from a budget of another local self-government unit UE funds and other funds from abroad assigned for a specific aim Other revenues specified in separate regulations A commune/province may make use of non-budget monetary funds: from a profit coming from a business activity, from repayable financing sources, from joint funds. Source: Own elaboration on a basis of : Babak, V., Władza i finanse lokalne w Polsce i krajach ociennych, Katowice: Oficyna Wydawnicza Branta, 2007, s. 312 The local self-government units have also share in the state taxes and they obtain subsidies from the central budget or another local selfgovernment unit. In this group of revenues there are also UE funds and 31

7 other funds from abroad assigned to a specific purpose. The Slovakian local self-government finances also its activity from non-budget monetary funds, such as a profit coming from a business activity, or repayable financing sources. 3. Similarities and differences in the financial economy of the local self-government of Poland and the Republic of Slovakia The obligatory system of local finances of Poland and the Republic of Slovakia is an effect of a reform and decentralization of public finances. Legal norms, used in both countries, regulating the system of the public finances, including local finances are in accordance with organic laws and the European Charter of Local Self-Government. The share in central taxes and local taxes and charges are the main source of incomes of a local self-government for local self-government of both countries. However, in Slovakia local public donations are a base of a local self-government unit budget. It is an effect of consistent decentralization of the public finances in this country. It enabled a greater financial autonomy of the local self-governments. The budget is a foundation of the financial economy of the Polish and Slovakian local self-government units. It is an annual financial plan made in a specified form, according so called a budget classification. However, a composition of the budget is different in Polish and Slovakian system of the public finances. The budget of the Slovakian local self-government unit includes: a current budget including current revenues and expenditures, a capital budget, namely revenues from and expenditures on capital operations, financial operations, (procuring and paying back the means from repayable sources, repayable loans and allowances, bills issued and accepted, a sale and purchase of asset shares). Budgets of a commune and a higher territorial unit must be worked out as balanced or surplus budgets. Apart from the annual budget, the 32

8 Slovakian local self-governments have to make a long term budget, including plans for three subsequent budget years 7. The budget of the Polish local self-government, constitutes a uniform financial plan having such elements as: revenues and expenditures of a local self-government unit, sources of coverage of a deficit or a budget surplus allocation, revenues and expenditures of a budget, expenditures connected with long term investment programs expenditures on programs and projects realized from the union and other foreign funds - european funds budget 8. The annual budget is part of the long-term financial forecast local government units. As in the case of a commune and a higher territorial unit in the Republic of Slovakia so in Poland a principle of the budget balance recommends that a budget is balanced. However, in Poland it is not an obligatory order, because a budget deficit is allowable, although information about sources of its financing must be included in the budget. Conclusions The own researches, observations, conducted for many year, regarding effectiveness of use of financial means by the local selfgovernments allow stating that the financial policy, and in particular the budgetary policy of the local self-government in Poland and Slovakia, is restricted by a lot of system limitations. The regulations in force, starting from the organic law, specify a scope of activities in this area, although their effects depend, to a great degree, on an ability to identify and establish priorities of existing needs and an ability to use all available financial means effectively, the union funds in particular. The budget of the local self-government unit is the most important instrument of the management of local finances. An analysis of figures included in the budget constitutes a basis of an evaluation of the financial 7 V. Babak, Władza i finanse lokalne..., op. cit., s Art. 110 ustawy z dnia r. o finansach publicznych, Dz. U. Nr 157, poz

9 economy and effectiveness of use of means being at a disposal of the local authorities. Legal acts [1.] Konstytucja Rzeczpospolitej Polskiej z dnia 2 kwietnia 1997 r., Dz. U. Nr 78, poz.483. [2.] Ustawa o finansach publicznych z dnia 27 sierpnia 2009 r., Dz. U. Nr 157, poz Bibliography [1.] Babak, V., Zaklady finanneho prava, ast. Koszyce, 2001, za: Władza i finanse lokalne w Polsce i krajach ociennych, red. E. Rukowski, B. Dolnicki, Oficyna Wydawnicza Branta, Bydgoszcz- Białystok-Katowice [2.] Dylewski M., Planowanie budetowe w podsektorze samorzdowym. Uwarunkowania, procedury, modele, Difin, Warszawa [3.] Mackiewicz M., Malinowska-Misig E., Misig E., Tomalak M., Budet i finanse Poradnik dla samorzdów, MUNICIPIUM SA, Warszawa [4.] Rukowski E., Finanse lokalne w dobie akcesji, Warszawa. Dom Wydawniczy ABC, [5.] Štofko, S., Fiškálna decentralizácia - súas reformy verejnej správy. [w:] Rozwój Euroregionu Beskidy IV. Samorzdy i fundusze unijne tworzenie ramowych warunków rozwoju. WSBiF, Bielsko- Biała

10 POLITYKA FINANSOWA SAMORZDU TERYTORIALNEGO W POLSCE I REPUBLICE SŁOWACKIEJ Streszczenie Głównym zadaniem jednostek samorzdu terytorialnego jest zaspokajanie zbiorowych potrzeb społecznoci lokalnej. Winno to by równie podstawowym celem polityki finansowej samorzdu terytorialnego Z tego powodu skuteczne i efektywne zarzdzanie rodkami finansowymi ma zapewni odpowiedni dostp społecznoci lokalnej do publicznych dóbr i usług. Dodatkowo takie usługi powinny bywiadczone na moliwie najwyszym poziomie. Zarzdzanie rodkami bdcymi w dyspozycji samorzdów terytorialnych musi by zgodne z przypisanymi zadaniami i oczekiwaniami społecznymi zarówno w Polsce, jak i w Republice Słowackiej. Celem artykułu jest przedstawienie polityki finansowej jednostek samorzdu terytorialnego w Polsce i Republice Słowackiej oraz okrelenie podobiestw i rónic w tym zakresie na podstawie obowizujcego prawa i studium aktualnej literatury. Słowa kluczowe: jednostki samorzdu terytorialnego, finanse publiczne, finanse lokalne, budet 35