Opportunities  for Expanding the Tax Powers of Bulgarian Municipalities

ABSTRACT

The present paper emphasizes the importance of the tax autonomy for achieving real fiscal decentralization in Bulgaria. The object of study is the opportunities for expanding the regions’ revenue basis by delegating local powers as regards the defining and administering of income and consumption tax revenues. For that purpose the basic principles of distributing the tax powers between central and local authorities are drawn and the hardships when applying these principles in the conditions of Bulgarian practice are defined. The opportunities for using the income taxes of physical persons, the profit tax and the VAT as a local income source are studied on the basis of the formulated criteria of distribution optimality. The study allows for formulating specific recommendations for optimizing the tax structure in the Republic of Bulgaria with a view to increasing the effectiveness of the public sector functioning.