Higher collection rates and property tax assessments will not solve the problem of low municipal revenues. This is the assessment of the Institute for Market Economics in a comment on the government's proposed change in tax assessments.
By 2028, they should be twice as high as the current ones, if the proposal is adopted.
The new government seems to be encountering internal resistance in its attempts to reduce the deficit with reforms in the expenditure side of the expected 2027 budget. That is why the government is resorting to measures that aim to increase revenues, but which strictly formally cannot be interpreted as a violation of the repeatedly repeated promise that there will be no increase in basic taxes, commented Teodor Nedev from the Institute for Market Economics.
He adds that tax assessments must be increased because they have not been updated for years.
According to him, however, this will not significantly increase revenues for local authorities.
The economist estimates that the full collection rate for property and vehicle taxes would bring municipalities an additional 150 million euros by 2025 - an insufficient amount to significantly change local finances. Even a one-time doubling of tax assessments would provide about 649 million euros in additional revenue, but would not eliminate the shortfall in own revenues.
According to the researcher, bolder reforms are needed, for example, for municipalities to receive a share of the income tax. Nedev also draws attention to the fact that there are very serious regional differences.