TIRANA, OCTOBER 21, 2010      USAID’s Local Governance Program in Albania (LGPA) released a study on “Immovable Property Tax – an Innovative Instrument for Increasing Local Revenues” during a roundtable discussion organized with representatives from local government units, the Ministry of Finance, the Ministry of Interior, the Immovable Property Registration Office, and other stakeholders.  The research and policy study was prepared by urban finance experts from Co-PLAN, with support by USAID and the Open Society Institute’s “Influence on Policymaking” project.

The immovable property tax, and especially the tax on buildings that is administered by local government units, is an underutilized source of revenue. Although Parliament increased the percentage of property tax that local governments receive to 100% in 2003, the immovable property tax could be further improved.  This tax contributed only 5% of local government income in 2007, the equivalent of 3 dollars per person or about 0.1% of GDP.  This under-performance is due to administrative weaknesses in local tax management.  With improvements, revenues from this source could increase.

The study explores innovative alternatives that can be used by local governance units to improve finances and meet growing needs for infrastructure investment.  Based on the preliminary results of the study, USAID’s LGPA has launched ‘Immovable Property Tax Action Plans’ in four municipalities, designed to improve immovable property tax administration and collection rates. 

The study also describes the potential role of the immovable property tax as important regulatory tools on land and building administration process.  The study recommends changes in the existing immovable property tax law and better coordination of tax policies with urban planning and land development procedures.

USAID’s Local Governance Program fosters local economic growth, improves local governance, and strengthens civic and private sector engagement in ten municipalities throughout Albania:  Elbasan, Fier, Fushe-Kruje, Gramsh, Korçe, Kukes, Lezhe, Librazhd, Pogradec and Shkoder.