Skip to main content
SpringerLink
Log in

Albania: Aligning Territorial and Fiscal Decentralisation

  • Chapter
  • First Online:
Fiscal Decentralisation, Local Government and Policy Reversals in Southeastern Europe

Abstract

This chapter provides an overview of decentralisation reforms in Albania over the last 25 years. Although offering a similar bundle of instruments, decentralisation reforms undertaken across four distinct periods differ substantially in terms of scope, incentives, and outcomes. Albania has established the building blocks for effective local governance. Yet, significant challenges remain, in particular in the fiscal dimension of decentralisation. Local tax powers, and thereby local finances, continue to be sacrificed to serve “higher causes” by subsequent national governments which seek to retain control over specific financial instruments to influence capital investments at the local level. Recent reforms offer great opportunities, which might be lost if they are not effectively implemented and complemented by additional measures that remove constraints on local revenue-raising options.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 89.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 119.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 169.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Notes

  1. 1.

    Law no. 7572, dated 10 June 1992 on the Organisation and Functioning of Local Government, Official Gazette, No. 3/1992.

  2. 2.

    Program on Reinforcing Local and Regional Government Structures in Albania, implemented by the Council of Europe with the support of the Swiss Agency for Development and Cooperation, in partnership with the Ministry of Interior and Local Government Associations, April 2011, Albania Baseline Assessment Report on Inter-Municipal Cooperation in Local Governance, p. 5.

  3. 3.

    Law no. 7570, dated 03 June 1992, on Some Amendments to Law no. 7491, dated 29 April 1991, on the Constitutional Dispositions, Official Gazette, No. 3/1992.

  4. 4.

    Law no. 7572, dated 10 June 1992 on the Organisation and Functioning of Local Government Official Gazette, No. 3/1992.

  5. 5.

    Decision of the Council of Ministers no. 269, dated 25 June 1992, on the Administrative and Territorial Division of the Republic of Albania.

  6. 6.

    Law no. 7608, dated 22 September 1992 on the Prefectures, Official Gazette, No. 9/1992, mandated the establishment of 12 Prefectures as the largest territorial units, headed by the Prefect which is appointed and is acted as the representative of the Council of Ministers with the aim of monitoring the implementation of legal framework from LGUs.

  7. 7.

    Law no. 7548, dated 08 January 1992, on the Tax System in the Republic of Albania, Official Gazette, No. 1/1992.

  8. 8.

    Law no. 7776, dated 22 December 1993, on the Local Budget, Official Gazette, No. 15/1993.

  9. 9.

    Law no. 7805, dated 16 March 1994, on the Property Tax in the Republic of Albania, Official Gazette, No. 3/1994.

  10. 10.

    Local borrowing was only mentioned in this law as a possible source, but it was not regulated and implemented until 2008.

  11. 11.

    Albania signed the European Charter of Local Self-Government on 27 May 1998 and fully ratified it on 4 April 2000, with entry into force on 1 August 2000.

  12. 12.

    Law no. 8417, dated 21 October 1998, The Constitution of the Republic of Albania, Official Gazette, No. 28/1998.

  13. 13.

    Law no. 8652, dated 31 July 2000, on the Organisation and Functioning of Local Governments, Official Gazette, No. 25/2000.

  14. 14.

    Law no. 8653, dated 31 July 2000, on the Territorial and Administrative Division of Local Governments, Official Gazette, No. 26/2000.

  15. 15.

    Law no. 8982, dated 12 December 2002, on the Local Tax System, Official Gazette, No. 82/2002.

  16. 16.

    Law no. 8744, dated 22 February 2001, on the Transfer of the State Immovable Properties to Local Governments, Official Gazette, No. 9/2001; Law no. 9352, dated 03 March 2005, on Some Amendments to Law no. 8102/1996; on the Regulatory Framework of the Water Supply and Wastewater System, Official Gazette, No. 19/2001.

  17. 17.

    The main shared functions were broadly defined as pre-school and pre-university education; primary health service and public health protection; social assistance and poverty alleviation; public order and civil protection and environmental protection.

  18. 18.

    Law no. 8549, dated 11 November 1999, on Civil Service, Official Gazette, No. 36/1999.

  19. 19.

    Law no. 8653, dated 31 July 2000, on the Territorial and Administrative Division of Local Governments, Official Gazette, No. 26/2000; The communes of Barbullush and Bushat voluntary merged to create a single commune, leading to 308 communes.

  20. 20.

    Law no. 8982, dated 12 December 2002, on the Local Tax System, Official Gazette, No. 82/2002.

    The Law was thoroughly revised in 2006 with Law no. 9632, dated 30 October 2006, on the Local Tax System. Following this law, the most important local taxes were: the small business tax; the property tax on buildings and agricultural land; the hotel tax; the tax on the infrastructure impact of new buildings; the property transfer tax; the annual tax on vehicle registration; the public space occupation tax, and the billboard tax.

  21. 21.

    Law no. 10190, dated 26 November 2009, on the State Budget 2010, Official Gazette, No. 26/2009.

  22. 22.

    Decision of the Council of Ministers no. 135, dated 03 February 2010, on the Definition of the Criteria for the Distribution of the Regional Development Fund, Official Gazette, No. 25/2010; Decision of the Council of Ministers no. 2, dated 11 March 2011, on the Criteria for Allocating the Regional Development Fund.

  23. 23.

    Decision of the Council of Ministers no. 691, dated 29 July 2015, on the National Crosscutting Strategy for Decentralisation and Local Governance, 2015–2020, Official Gazette, No. 137/2008 p. 17; https://www.reporter.al/shkodra-jashte-rilindjes-urbane-merr-me-pak-fonde-se-maliqi-dhe-roskoveci/; http://aam.org.al/qendrimi-dhe-shqetesimi-i-shoqates-se-bashkive-lidhur-me-ndarjen-e-fondeve-nga-komiteti-per-zhvillimin-e-rajoneve/.

  24. 24.

    Law no. 9869, dated 04 February 2008, on Local Borrowing, Official Gazette, No. 18/2008.

  25. 25.

    Law no. 10117, dated 23 April 2009, amending the Law No. 9632/2006. on the Local Tax System, Official Gazette, No. 62/2009.

  26. 26.

    Law no. 10025, dated 27 November 2008, on the 2009 Budget, Official Gazette, No. 182/2009; and Law no. 10190, dated 26 November 2009, on the 2010 Budget, Official Gazette, No. 175/2009.

  27. 27.

    Law no. 10340, dated 28 October 2010, on the Past Due Obligations towards Third Parties of the Public Utilities Owned by Local Governments, Official Gazette, No. 159/2010.

  28. 28.

    Law no. 10025, dated 27 November 2008, on the Year 2009 Budget, Official Gazette, No. 182/2009; Law no. 10190, dated 26 November 2009, on the Year 2010 Budget, Official Gazette, No. 175/2009 and PLGP/USAID, Statistical Brief: Local Government Finances in Albania 2002–2015.

  29. 29.

    Law no. 115/2014 dated 31 July 2014 on the administrative and territorial units of local government in the Republic of Albania, Official Gazette, No. 137/2014. The second-level local governments, the 12 Regions were not reorganised by the TAR.

  30. 30.

    Decision of the Council of Ministers no. 691, dated 29 July 2015, on the National Crosscutting Strategy for Decentralisation and Local Governance, 2015–2020, Official Gazette, No. 137/2008.

  31. 31.

    Law no. 139/2015, dated 17 December 2015, on Local Self-Government, Official Gazette, No. 249/2015.

  32. 32.

    Law no. 152/2013, dated 30 May 2013, on Civil Service, Official Gazette, No. 95/2013. It replaced the previous Law no. 8549, dated 11 November 1999 on Civil Service.

  33. 33.

    Under the Project “Strengthening Local Government Structures and Cooperation of Local Elected Representatives in Albania—Phase II (2012–2015)”, implemented by Council of Europe with support of the Swiss Agency for Development and Cooperation (SDC), unpublished, with authors Xhumari, M. & Dollani, P., 2013.

  34. 34.

    Law no. 68/2017, dated 27 April 2017, on Local Self-Government Finance, Official Gazette, No. 113/2017.

  35. 35.

    Ministry of Finance of Albania http://www.financa.gov.al/al/raportime/buxheti/buxheti-i-pushtetit-vendor/viti-20161483103977.

  36. 36.

    Law no. 106/2017, dated 30 November 2017, on Some Amendments to Law no. 9632, dated 30 October 2006, on the Local Tax System, as amended, Official Gazette, No. 222/2017.

References

  • Bahl, W. R., & Linn, F. J. (1992). Urban public finance in developing countries. Oxford: Oxford University Press.

    Google Scholar 

  • Banks, C., & Pigey, H. J. (1998). Republic of Albania opportunities and issues for municipal reform. East European Regional Housing Sector Assistance Project 180-0034. Washington, DC: USAID.

    Google Scholar 

  • Brahimi, F., Baholli, F., Haldeda, N., & Dika, I. (2013). Decentralisation reform, case of Albania. Mediterranean Journal of Social Sciences, 10(4), 524–531.

    Google Scholar 

  • Council of Europe. (2011). Albania baseline assessment report on inter-municipal cooperation in local governance.

    Google Scholar 

  • Hoxha, A. (2002). Local self-government and decentralisation: Case of Albania: History, reforms and challenges. Tirana: Institute for Contemporary Studies.

    Google Scholar 

  • Hoxha, A. (2007). Does decentralisation support good governance? Decentralisation in Albania—A top down perspective. CIS Working Paper, No. 31.

    Google Scholar 

  • Ministry of Finance of Albania. (2015). Macroeconomic and fiscal indicators.

    Google Scholar 

  • Ministry of Finance of Albania. (2017). Consolidated fiscal indicators of the general government. Retrieved from www.financa.gov.al/al/raportime/programimi-ekonomiko-fiskal/raporte-dhe-statistika-fiskale-mujore/statistika-fiskale-mujore

  • Network of Associations of Local Authorities in South-East Europe (NALAS). (2015). Fiscal decentralisation indicators for Southeast Europe, 2006–2014. Retrieved from www.nalas.eu/Publications/Books/2016_FD_Report

  • Oates, W. E. (1993). Fiscal decentralisation and economic development. National Tax Journal, 46(2), 237–243.

    Google Scholar 

  • Oates, W. E. (1999). An essay on fiscal federalism. Journal of Economic Literature, 37(3), 1120–1149.

    Article  Google Scholar 

  • Oates, W. E. (2005). Toward a second-generation theory of fiscal federalism. International Tax and Public Finance, 12, 349–373.

    Article  Google Scholar 

  • Oates, W. E. (2008). On the evolution of fiscal federalism: Theory and institutions. National Tax Journal, LXI(2), 313–334.

    Article  Google Scholar 

  • USAID Planning and Local Governance Project (PLGP) in Albania. (2015). Creating an equitable, transparent and predictable unconditional grant formula. Retrieved from www.plgp.al.

  • USAID Planning and Local Governance Project (PLGP) in Albania. (2016a). A profile of municipal finance system in Albania: The need for a framework law on local finances. Retrieved from www.plgp.al

  • USAID Planning and Local Governance Project (PLGP) in Albania. (2016b). Key recommendations for the development and discussion of the law on local government finances. Retrieved from www.plgp.al.

  • USAID Planning and Local Governance Project (PLGP) in Albania. (2016c). Local government finances in Albania 2002–2015. Retrieved from www.plgp.al

  • USAID Planning and Local Governance Project (PLGP) in Albania. (2017). After territorial administrative reform and on the eve of the implementation of the law on local government finance. Retrieved from www.plgp.al

  • Weingast, B. R. (2009). Second generation fiscal federalism: The implications of fiscal incentives. Journal of Urban Economics, 65, 279–293.

    Article  Google Scholar 

  • Weingast, B. R. (2014). Second generation fiscal federalism: Political aspects of decentralisation and economic development. World Development, 53, 14–25.

    Article  Google Scholar 

  • World Bank. (1994). Fiscal decentralisation and intergovernmental finances in the Republic of Albania.

    Google Scholar 

  • World Bank. (2008). Albania local finance policy note: Programmatic public expenditure and institutional review.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. USAID Albania, Tirana, Albania

    Elton Stafa

  2. The Network of Associations of Local Authorities of South-East Europe, Skopje, Macedonia

    Elton Stafa

  3. University of Tirana, Tirana, Albania

    Merita Xhumari

Authors
  1. Elton Stafa
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Merita Xhumari
    View author publications

    You can also search for this author in PubMed Google Scholar

Editor information

Editors and Affiliations

  1. London School of Economics and Political Science, European Institute, London, UK

    William Bartlett

  2. University of Graz, Graz, Steiermark, Austria

    Sanja Kmezić

  3. Faculty of Economics, Finance and Administration, Belgrade, Serbia

    Katarina Đulić

Rights and permissions

Reprints and permissions

Copyright information

© 2018 The Author(s)

About this chapter

Check for updates. Verify currency and authenticity via CrossMark

Cite this chapter

Stafa, E., Xhumari, M. (2018). Albania: Aligning Territorial and Fiscal Decentralisation. In: Bartlett, W., Kmezić, S., Đulić, K. (eds) Fiscal Decentralisation, Local Government and Policy Reversals in Southeastern Europe. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-96092-0_9

Download citation

  • DOI: https://doi.org/10.1007/978-3-319-96092-0_9

  • Published:

  • Publisher Name: Palgrave Macmillan, Cham

  • Print ISBN: 978-3-319-96091-3

  • Online ISBN: 978-3-319-96092-0

  • eBook Packages: Economics and FinanceEconomics and Finance (R0)

Publish with us

Policies and ethics

Search

Navigation