REFERENCE: The municipalities were established in Azerbaijan on the eve of entrance o the Council of Europe as one of terms of membership. There are a total of 2,732 municipalities in different cities and regions of Azerbaijan and the first elections were held in 1999
Analysis of the activities of the municipalities, carried out by the Association of Assistance to Civil Society Development in Azerbaijan revealed that such bodies develop slowly. At present the average monthly income of 2,342 municipalities in the country is lower than the all-country indicator. In accordance with the State Statistics Committee, in the first half-year the average monthly income of municipalities equaled to 736 manats, or 6 manats less than last year figure.
Such unequal fulfillment of the budget of local authorities of different regions is of course linked with unequal development of regions of Azerbaijan. It also testifies for unequal socio-economic development observe din Azerbaijan. The concentration of such considerable economic resources in Baku resulted in increase of the population of the capital to 4 million people. Almost 70% of all investments fall on Baku. Respectively, even the advanced tax legislation will not ensure the desired level of local budgets, unless the program on development of regions is implemented n right way. At present the regions are in need of investments and root change of a regional policy concept rater the tax privileges.
Despite, the fluctuations in the indices of the average monthly income of municipalities on different regions, it is still less. If to take into consideration that the municipalities are starting collecting the property and land taxes in the second half-year, one can suppose that the figure will increase this year. Thus, 66.5% of incomes of the municipalities are comprised of funds obtained from rent and privatization of the property. It mainly refers to the land operation, as the municipalities own one third of the Azerbaijani lands. The amount of land taxes collected from physical entities in the total constitutes 17%, while the property tax less than 3%. Respectively, the major income sources are taxes from lad rent, payment for parking, etc.
In general, the formation of the budget of municipalities is not difficult. Major articles of the public budget revenues are as follows:
- tax revenues, which are mainly comprised of land tax, property tax, royalties;
- non-tax revenues (profit of enterprises belong to municipalities, interests from loan, grants and donations, credit from transactions with the securities, etc);
- other revenues not related to the first and second divisions (subsidy, revenues from the privatization and sale of municipal facilities, as well as revenue from out and transferences).
To increase the level of collection of local taxes in 2003 the government adopted Rules on Tax bodies of Municipalities. In accordance with the document, they were empowered in collection of municipal taxes and payments, which earlier belonged to territorial bodies of the Ministry of Taxes. In case the local bodies are lack of own revenues to finance their activities, the Government will not be against presenting them new taxes and other payments.
For instance, the State Securities Committee at the Azerbaijani President's Apparat continues efforts directed at entrance of the self-government bodies to the stock market with their bonds. Gunduz Mammadov, the chairman of the State Securities Committee, said that that the consultations were held with the leadership of several regions and local self-government bodies. The bonds are the efficient tool for attracting the funds and perhaps, the first issue of bonds of the municipalities will be held in 2007. It is intended to act as one of the sources of additional revenues of the local municipalities.
It is necessary to outline the type of revenues in the budget of municipalities, such as subsidy from the public budget, allocated for financing concrete programs and projects of regional development. The 2007 public budget allots 3mln manats in expenses, or the same allocated for this year.
The municipalities desiring to receive a financial assurance from the public budget, should submit to the Ministry of Finances the feasibility for public budget grants-in-aid and financial assistance along with the legislative documents until the deadline. The key essence of the term to receive the grants-in-aid is increase of the efficiency of public expenses, overcoming facts of inexpedient use of financial assistance, misappropriation. Initially the distribution of grants-in-aid among the municipalities was carried out by the Ministry of Finances on the base of definite co-efficiency ratio reflecting the number people of definite region, its contribution in the socio-economic development, and the peculiarities of the economic development of the region. The method was efficient due to absence of market principles on its basis. The municipalities differ in Azerbaijan for many criteria, including the level of enterprise of local bodies.
However, having enough budget the municipalities could resolve the local problems through their own efforts and seldom rely on assistance of the Center. In accordance with its allocation, the activities of local self-government bodies should cover here direction: Firstly, the development of social infrastructure, social security of population, creation of new jobs. Secondly, the development of economy of the region, which is possible in a well developed production infrastructure. Thirdly, the improvement of ecological situation in the region.
However, average statistical Azerbaijani could hardly answer the question whether the existing funds are spent on appointment, as the people are deprived of information on the expediency of use of funds accumulated in the budget. The electors simply do not have access to data on income sand expenses. What calms is that following the enactment of the law on the Budgetary System, since 2003 the Azerbaijani municipalities pass through the audit held by the Accountancy Chamber of Azerbaijan. This measure is taken with respect to control over the funds of the public budget and public budget subsidy.
It seems the Azerbaijani municipalities still need time and the Government's support to get back into a routine of state power. Meanwhile, the residents feel confident in the municipalities' abilities and actively support their work, because all of us - ordinary people - are interested in the successful establishment of efficient self-government system.
Analysis of the activities of the municipalities, carried out by the Association of Assistance to Civil Society Development in Azerbaijan revealed that such bodies develop slowly. At present the average monthly income of 2,342 municipalities in the country is lower than the all-country indicator. In accordance with the State Statistics Committee, in the first half-year the average monthly income of municipalities equaled to 736 manats, or 6 manats less than last year figure.
Such unequal fulfillment of the budget of local authorities of different regions is of course linked with unequal development of regions of Azerbaijan. It also testifies for unequal socio-economic development observe din Azerbaijan. The concentration of such considerable economic resources in Baku resulted in increase of the population of the capital to 4 million people. Almost 70% of all investments fall on Baku. Respectively, even the advanced tax legislation will not ensure the desired level of local budgets, unless the program on development of regions is implemented n right way. At present the regions are in need of investments and root change of a regional policy concept rater the tax privileges.
Despite, the fluctuations in the indices of the average monthly income of municipalities on different regions, it is still less. If to take into consideration that the municipalities are starting collecting the property and land taxes in the second half-year, one can suppose that the figure will increase this year. Thus, 66.5% of incomes of the municipalities are comprised of funds obtained from rent and privatization of the property. It mainly refers to the land operation, as the municipalities own one third of the Azerbaijani lands. The amount of land taxes collected from physical entities in the total constitutes 17%, while the property tax less than 3%. Respectively, the major income sources are taxes from lad rent, payment for parking, etc.
In general, the formation of the budget of municipalities is not difficult. Major articles of the public budget revenues are as follows:
- tax revenues, which are mainly comprised of land tax, property tax, royalties;
- non-tax revenues (profit of enterprises belong to municipalities, interests from loan, grants and donations, credit from transactions with the securities, etc);
- other revenues not related to the first and second divisions (subsidy, revenues from the privatization and sale of municipal facilities, as well as revenue from out and transferences).
To increase the level of collection of local taxes in 2003 the government adopted Rules on Tax bodies of Municipalities. In accordance with the document, they were empowered in collection of municipal taxes and payments, which earlier belonged to territorial bodies of the Ministry of Taxes. In case the local bodies are lack of own revenues to finance their activities, the Government will not be against presenting them new taxes and other payments.
For instance, the State Securities Committee at the Azerbaijani President's Apparat continues efforts directed at entrance of the self-government bodies to the stock market with their bonds. Gunduz Mammadov, the chairman of the State Securities Committee, said that that the consultations were held with the leadership of several regions and local self-government bodies. The bonds are the efficient tool for attracting the funds and perhaps, the first issue of bonds of the municipalities will be held in 2007. It is intended to act as one of the sources of additional revenues of the local municipalities.
It is necessary to outline the type of revenues in the budget of municipalities, such as subsidy from the public budget, allocated for financing concrete programs and projects of regional development. The 2007 public budget allots 3mln manats in expenses, or the same allocated for this year.
The municipalities desiring to receive a financial assurance from the public budget, should submit to the Ministry of Finances the feasibility for public budget grants-in-aid and financial assistance along with the legislative documents until the deadline. The key essence of the term to receive the grants-in-aid is increase of the efficiency of public expenses, overcoming facts of inexpedient use of financial assistance, misappropriation. Initially the distribution of grants-in-aid among the municipalities was carried out by the Ministry of Finances on the base of definite co-efficiency ratio reflecting the number people of definite region, its contribution in the socio-economic development, and the peculiarities of the economic development of the region. The method was efficient due to absence of market principles on its basis. The municipalities differ in Azerbaijan for many criteria, including the level of enterprise of local bodies.
However, having enough budget the municipalities could resolve the local problems through their own efforts and seldom rely on assistance of the Center. In accordance with its allocation, the activities of local self-government bodies should cover here direction: Firstly, the development of social infrastructure, social security of population, creation of new jobs. Secondly, the development of economy of the region, which is possible in a well developed production infrastructure. Thirdly, the improvement of ecological situation in the region.
However, average statistical Azerbaijani could hardly answer the question whether the existing funds are spent on appointment, as the people are deprived of information on the expediency of use of funds accumulated in the budget. The electors simply do not have access to data on income sand expenses. What calms is that following the enactment of the law on the Budgetary System, since 2003 the Azerbaijani municipalities pass through the audit held by the Accountancy Chamber of Azerbaijan. This measure is taken with respect to control over the funds of the public budget and public budget subsidy.
It seems the Azerbaijani municipalities still need time and the Government's support to get back into a routine of state power. Meanwhile, the residents feel confident in the municipalities' abilities and actively support their work, because all of us - ordinary people - are interested in the successful establishment of efficient self-government system.