Future Perspectives for Local Government Finance in Hungary

Abstract

The aim of the study is to review those systems of resources which, on the one hand, promote the increase of the financial independence of local governments in Hungary, on the other hand, allow equalisation among the local governments with different income capacities. The first objective belongs to the issue of the regulation of the tasks and resources of local governments, while equalisation is only partially dealt with by the regulation of local governments. These tools are mainly designed to moderate the present differences in the income generating capacity, partly by the redistribution of the resources (e.g. personal income tax, supplementary subsidy), partly by a more efficient cost control of the supply of tasks (e.g. the stimulation of associations). Another set of tools are to increase the income generating capacities, these belong, however, to the issue of regional policy, in which local (county, municipal) governments are also important actors.