Level and Determinants of Regional Taxes in Croatia

Povzetek

The objective of this paper is to determine whether the revenues from regional (county) taxes in the Republic of Croatia are sufficient to finance current regional expenditures, and if not, why. The results show that regional taxes in Croatia are insufficient and that, according to a regression analysis, the greatest influence on regional tax revenues has the GDP per capita of the applicable region (which is also a measure of the regional's fiscal capacity). The main conclusion is that increasing regional tax revenue in Croatia would be desirable. Moreover, an efficient fiscal equalisation system is needed to help regions with lower GDP per capita (fiscal capacity) because their possibilities to collect regional taxes are limited.