Financial Autonomy of Local Governments in the Slovak Republic: A Panel Data Investigation

Abstract

Autonomy of local governments consists also in the financial autonomy. In the SR, the municipal financial autonomy is importantly influenced by dominant position of shared tax in the municipal tax revenue. When considering only own revenues (own tax and nontax), the financial autonomy of municipalities is low. In this paper the financial autonomy of municipalities in the SR is analyzed in the period 2005 – 2019. At the base of the Gini index, inequalities in financial autonomy are analyzed. Higher inequalities are observed in case of the exclu-sion of shared tax, what confirms that the shared tax serves as a channel of hori-zontal fiscal equalization. Employing the panel regression, determinants of financial autonomy are analyzed. The negative relationship is observed in case of the population growth, use of returnable financial resources, financial crisis and also the portion of shared tax on municipal tax revenue, when considering the financial autonomy based on own resources.