Anthony BUCHANAN (United Kingdom) presented the report on “Coping with the debt burden”, on behalf of Heather McVEY (United Kingdom, SOC), to the members of the Governance Committee, in Covasna County, Romania, on 30 May 2018. “The right of local authorities to adequate financial resources of their own is a key principle of the European Charter of Local Self-Government, enshrined in its Article 9. This article also introduces the principle of proportionality: any transfer of responsibilities must be accompanied by resources corresponding to the new powers and services to be provided,” he stated.

“Local taxation is also a key element of the financial autonomy of local authorities, as genuinely local taxes allow municipalities to raise revenues according to their decisions and policies. The capacity of local governments to generate revenue is thus an excellent indicator of their financial autonomy,” he underlined.

Mr. BUCHANAN stressed that, in some Council of Europe member states, the fiscal capacity of local authorities is extremely limited and some of them still do not guarantee the principle of sufficient municipal finance. “In 6 member states we found that, even where local authorities are free to provide services or to dispose of revenues generated at the local level, the latter are no longer sufficient to cover the cost of services, thus going against the principle of proportionality,” he added.

The draft recommendation approved by the Governance Committee calls on member states to adopt a common understanding of the financial autonomy of local authorities and to ensure that Article 9 of the Charter is applied. It will be discussed, for adoption, during the 35th Congress Session, in November 2018.

Source: https://www.coe.int/en/web/congress/-/the-full-implementation-of-the-charter-a-guarantee-for-adequate-financial-resources