Comparative Analysis of the Local Finance Systems in the EU Countries – Conclusions and Lessons for Bulgaria

The current study presents the essence and goals of the system of local finances. It conducts a comparative analysis and assessment of the types of services, the structure of local expenditures, the main revenue sources for local budgets, the way the system of government transfers functions, and the legal rights of local government in the EU with regard to expenditures and revenue generation. Furthermore, the study draws comparisons and analogies with the practice in Bulgaria. The conclusion presents theoretical and practical summarizations of the international experience and on that basis formulates recommendations for improvement of the system of local finances in Bulgaria.The main formulated recommendations are as follows: Bulgarian municipalities are comparatively large, which is why the creation of a second level of local government is unjustified; conditions for local democracy can be created by transferring legal powers and resources from the municipalities towards their territorial structures – the mayoralties; the municipalities need to receive legal powers to provide services relating to combating everyday crime, local fire protection and protection of the harvest; the scope of social service provision needs to be increased; the municipalities need to receive expenditure powers with regard to delegated services; the municipalities need to be given legal rights to vote on taxation rates up to 2-3% within the general 10% rate of the personal income tax.