Local Government Finances
Revenues come from both ordinary and extraordinary sources.
Ordinary revenue is derived from the State budget, property revenues, and established taxes and fees. By law, the State funds first level governments on the basis of a fixed formula: 20% of legal persons’ income tax, 50% of traffic duties and 3% of property transfer duties. For smaller populated communities and municipalities, the State has also allocated additional revenue based on other expenses (e.g. the cost of supplying water, maintaining road networks, and climate). Local governments are required to direct any property or resource fees to related expenses (e.g. drinking water fees must go towards the maintenance and improvement of the water system). Other forms of taxation or fines (e.g. parking fees) can be used wherever the government deems necessary.
Extraordinary revenue originates from sources like loans, inheritances, auctions, rents and fines.
Income generation is not limited to traditional service sources. Local governments can also initiate or participate in entrepreneurial activities that include a wide range of possible partnerships.
Each year communities and municipalities formulate their budgets in terms of expected revenues and expenses. Financial management and auditing is then based on this plan.
Read more about this topic: Municipalities And Communities Of Greece
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