Ministry of Finance: The surplus of municipalities and cities should increase to CZK 30 billion this year

Ministry of Finance: The surplus of municipalities and cities should increase to CZK 30 billion this year
Ministry of Finance: The surplus of municipalities and cities should increase to CZK 30 billion this year

Olomouc – This year, the economic surplus of cities and municipalities should increase to 30 billion crowns from last year’s 25.3 billion crowns, mainly thanks to a significant increase in tax revenues. Karla Rucká from the Department of Financing Territorial Budgets of the Ministry of Finance said this at the Day of Small Communities conference in Olomouc today. In the next two years, according to Rucká, the rate of growth of tax revenues, which form the pillar of the budgets of cities and municipalities, will slow down significantly. Last year, the municipalities reported a budget surplus of 25.3 billion crowns, a year-on-year decrease of eight billion crowns.

“It is not new that the driving force behind the growth of municipalities’ income is their tax income. This trend was started after covid and will continue for the year 2023,” said Rucká, according to whom tax income accounted for 88 percent of the growth in the own income of cities and municipalities last year. “The situation will probably be similar this year as well,” Rucká pointed out, according to which municipal tax revenues are growing rapidly this year and are expected to increase by almost 14 percent year-on-year to 303 billion crowns for the entire year 2023.

According to Rucká, municipal revenues from shared taxes will grow even after the adoption of the consolidation package, which is in the final phase of approval, but much more slowly. In the next two years, experts estimate their growth at four to five percent per year. In 2024, the tax revenues of cities and municipalities are to amount to 316 billion crowns and a year later to 328 billion crowns. “This prediction includes all the influences that are part of the consolidation package,” said Rucká.

The consolidation package of measures, from which the government promises to improve the state of the state budget in the next two years, will be the main point of the Senate meeting on Wednesday. It also includes an increase in real estate tax, the revenue of which is estimated at ten billion crowns and is ultimately to remain 100 percent to local governments. However, the government plans to reduce the amount of money it distributes between municipalities and cities in the budget determination of taxes by roughly ten billion crowns. However, the Chamber of Statutory Cities of the Union of Cities and Municipalities of the Czech Republic (SMO) does not agree with this, according to which cities and municipalities already have a problem with ensuring services for residents and investments.

Olomouc Mayor and Chairman of the Chamber of Statutory Cities SMO Miroslav Žbánek (ANO) pointed out that the government’s consolidation package is tying the hands of cities and municipalities when planning investments for next year. “The impact of the tax package on the city budget (Olomouce) is already close to 100 million crowns today, and we are starting to have a big problem compiling the budget for next year from an operational point of view, which also includes major repairs,” said Žbánek.

According to Rucká, the financial possibilities of municipalities have doubled in the last ten years. In 2013, their average operating balance per capita amounted to 5,177 crowns, and by the end of last year it had grown to 10,555 crowns. The cumulative economic surplus of cities and municipalities over ten years amounted to 220 billion crowns, of which 100 billion crowns were accounted for in Prague. Rucká pointed out, however, that municipalities are unable to utilize operating surpluses. Over the last decade, they did not use 147 billion crowns for investments.

CR economy administration 2023 municipality FLEŠ

The article is in Czech

Tags: Ministry Finance surplus municipalities cities increase CZK billion year


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