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What Are The Advantages Of Local Government

817 Words4 Pages

The local taxation were divided by three categories known as taxes on property, taxes on income and taxes in sale of goods and services. Taxes on property brings two advantages which are the revenue is localised and it cannot be hidden by a ‘black economy’ (Davey, 2003, p.2). In Central and Eastern European Countries the personal income tax become the largest revenue for the local governments because the income tax in these local governments have greater potential capacity compare to other taxes at the local level (Davey, 2003, p.3). Blair (1992) emphasizes that the local taxation could enhance the autonomous of local authorities on their expenditures and increase accountability of the local officials to the taxpayers. Meanwhile, for the intergovernmental transfer, it consists of share of national taxes by formula of by origin, and grants which are for specific expenditure and used for the local government purposes. Theses transfer ensure equalisation vertically and horizontally. Vertical equalisation sought to decrease gap between local government services cost and their revenue sources, meanwhile horizontal equalisation sought to adjust differences between local governments spending needs (Blair, 1992). Preserving autonomy is a main component to obtain sustainability in democratic process (Heller, 2001). Myerson (2006) indicates that democracy failed to provide rational equilibrium for a centralized unitary states but I can be overcome by decentralizing power to the

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