Modern challenges in establishing financial base of local self-government in Georgia

Modern problems of establishing the financial base of local self-government, some suggestions to address them, distinguishing characteristics of local self-government being a branch of the government are considered in the paper. During the period of 10-12 years since the collapse of the Former Soviet Union and formation of new States there was a need for decentralization of public finances. The paper also analyzes the specificity of the dynamics of the share of the local self-govenance budgets in the summary budget over the last decade, and it was concluded that Georgia functions within the paternalistic model of the State; it acts as stabilizing and equilizing agent, while the municipalities appear to be only the subjects that spend money. According to the conclusion taken as result of research: in order to enable local authorities to exercise their power properly, they should be provided with sufficient financial resources, for which it is necessary to reconsider the issue of expanding the revenue base. To that end, it is advisable to award the local tax status to any State tax or turn it into a regulatory fee; that model should not reduce the effectiveness of tax administration, and it should stimulate the increase of the tax basis of the local self-government. © 2018 Bull. Georg. Natl. Acad. Sci.