Changes in the local government income compensation scheme

• Main Author: Alicja Młynarczyk
• Format: Article
• Language: Polish
• Published: Wydawnictwo Naukowe Uniwersytetu Mikołaja Kopernika 2016-09-01
• Series: Prawo Budżetowe Państwa i Samorządu
• Subjects: local government income compensation; criteria for subsidizing local governments; subsidies
• Online Access: http://apcz.pl/czasopisma/index.php/PBPS/article/view/PBPS.2016.015

The significant factor that enforces changes in the current local government financing system are some defects in the horizontal compensation scheme at the poviat and voievodship levels, expressed in the overdue redistribution of income. The changes in the local government income compensation scheme, as proposed recently by the legislator, result from the necessity to implement the recommendations of the Constitutional Tribunal. According to the Tribunal, the horizontal compensation scheme, based on transferring funds from wealthier local governments to poorer ones by the means of making payments for increasing the values of subsidies, should make for an exceptional measure and may only supplement the system of vertical compensating from the Treasury. The intention that stands behind the new draft is to introduce such a corrective and compensating mechanism that would not bring about reduction of incomes achieved by the contributing voivodeships. The proposed solutions would be temporary only - for the period of three years. Permanent solutions, however, need to be adopted to economical reforms, which will have an effect on incomes achieved by local government units.