More Than Half of Tirana’s Budget Comes from Construction Companies

Recent data published by Monitor Magazine, which cites Financa Vendore portal, show the increasing dependency of the Municipality of Tirana’s budget on the construction industry.

The doubling of the infrastructure tax from 4% to 8% as well as a large increase in building permits given out by the Municipality have led to an increase in the revenue from this tax from 87,521,920 lekë (~€662,000) in the first quarter of 2015 to 1,325,914,500 lekë (~€10 million) in the same period in 2017, an increase of 2,386%!

In Q1 2015, revenue from the infrastructure taxes made up 11% of the municipal income, whereas in Q1 2017 they comprised 56% of the total budget.

Another significant increase was in the income from other taxes and fees, which includes the newly imposed parking fees. Compared to Q1 2015, the income generated form other taxes and fees increased in Q1 2015 increased 3,607%, increasing their share in the total municipal revenue from 0.24%, to 7.4%.

At the same time, income from the small business tax continues to drop—in Q1 20171 it counted for a mere 0.25% of the total revenue.

These numbers clearly show the new features of the financial regime installed by Mayor Erion Veliaj. More than half of the municipal budget, and therefore the functioning of the municipality itself, is dependent on construction projects. Construction has literally become the economic engine that runs the municipality, even though it apparently still needs to raise additional taxes to provide for essential infrastructures such as water and schools.

At the same time, construction projects, such as those in the Bus Station Park, further destroy public space and contribute to the high level of air pollution in Tirana. In other words, the municipality’s taxation politics is predatory on the city. Only by building more buildings, year after year, will the municipality be able to avoid bankruptcy, while actual productive economic activity contributes less and less to its budget.