Tirana's budget: 8 million euros more from property tax, 6 million euros for parking, record education tax

The municipality of Tirana anticipates having a budget of 33 billion lek (about 300 million euros) available in 2024, an amount that is 16% higher than this year's expectation, according to the 2024 draft budget, made public by the municipality.

54% of this amount, or ALL 18.4 billion, will be provided by the municipality from the income it collects from taxes and fees, while the rest will come from conditional and unconditional transfers (ALL 5.2 billion) and retained earnings ( 10 billion ALL).

From its own taxes, the main weight continues to be the "Infrastructure impact tax from new constructions", from which the Municipality is expected to collect 6.4 billion ALL, or 14% more than the expected 2023. The amount that the municipality will collect from the granting of permits for new constructions is as much as 35% of the municipality's own income and 19% of the total income.

This high dependence of the Municipality on the tax collected for new construction permits signals that the momentum of construction will continue not only in 2024, but also in 2025 and 2026, with 6.5 billion ALL of income for each year.

In 2023, the municipality says it expects to collect ALL 7 billion from the Infrastructure Impact Tax from new constructions, up from ALL 5.5 billion that was the initial plan. The municipality says that "The realization of the income from this tax exceeds the approved plan as a result of the applications beyond the forecasts.

Compared to other areas of commercial activity, the construction sector has continued to be one of the main pillars of economic development and one of the activities that brings the most income.

However, local experts have always raised the concern that the Municipality of Tirana is becoming more and more dependent on this tax to ensure its own income, being a model of unsustainable development, as they bring in a third of the income.

The second item that will bring more income is "Real estate tax" from which 3.8 billion ALL is expected to be collected, or 891 million ALL (8 million euros) more than the 2023 expectation, with an annual increase of 31%.

According to the Municipality's report, this forecast has taken into account the changes in the average sale prices of houses according to VKM 457 dated 26.07.2023 and the possibility of harvesting for more subjects such as business and family ones. Family members are expected to pay 868 million ALL, or 18% more (+156 million ALL). The highest burden will fall on businesses, which are expected to pay 2.9 billion ALL, an increase of 25%, or 735 million ALL more.

2.6 billion ALL is expected to be collected from the "cleaning fee", almost at the same level as this year's expectation.

The fourth item that is expected to bring more revenue is the "Temporary Tax for Educational Infrastructure", from which 926 million lek (8.4 million euros) are expected to be collected, the highest level since the implementation began. This tax is expected to be collected in 2025, with 971 million ALL, when the deadline for its implementation ends. According to the municipality's report,

The temporary education infrastructure tax has a satisfactory feasibility since its entry into force in 2016, both for the business category and for the family category. At the beginning of 2023, the receipts from this tax were reduced by the approval of this tax for a new period of 3 years and the limitation of its value to the extent of 35% of the building tax liability for the same entity.

The expected level of realization for the year 2023 will be above the predicted value for the "Family" entities, taking into account the entry into force of the new VKM on 28.07.2023 and the application of reference price changes in August billings 2023 for the building tax and respectively for the temporary tax for the educational infrastructure.

For business entities, this change will not affect the expected realization value for 2023 and the effect for the 5-month period will be noticed in the following year together with the forecast for 2024. However, the change in reference prices for residential apartments and as a result, the reference prices for structures used for business purposes and the estimates for the building tax for these entities will serve as the upper limit of the estimates for the temporary tax of the educational infrastructure, the municipality clarifies.

For parking, a mission that is becoming more and more difficult and more expensive in the capital, the Municipality is expected to collect 623 million lek, or almost 6 million euros, about 3.5% more compared to the expected 2023. According to the Municipality, the receipts from the parking fee have shown an upward trend since the beginning of the application of this fee, with the exception of 2020, the year of the pandemic, where the restriction of movement also reduced the parking of vehicles on streets and squares.

These five taxes will bring the municipality almost 80% of its income, which it is expected to collect from taxes and fees. Monitor