The financing of local councils in Malta and other European countries

Abstract

Constrained by limited sources of funding, local councils in Malta depend wholly on the annual funding by the Central Government. Owing to this, local councils are limited to their legal obligations without giving space for other initiatives. This dissertation studies the present system of financing of local councils in Malta in an effort to improve it. It also seeks additional adequate sources of finance other than the government allocation. The views of local councils' officials were obtained by means of 70 postal questionnaires and 12 interviews. The study finds that there is a case for revising the present system by amending the formula for funding, introducing additional categories in the 'Funds for Special Needs' scheme and adopting new bye-laws. With respect to non-government sources of finance, the study finds that councils' officials are in favour of the introduction of tax sharing (but not exclusive local income tax), property tax and other sources of income similar to those in other European countries.