LOCAL TAXES AND FEES AS A FINANCIAL AND LEGAL INSTRUMENT FOR THE IMPLEMENTATION OF REGIONAL DEVELOPMENT STRATEGIES

Abstract

This study examines local taxes and fees as a legal and financial instrument for

regional development in the Republic of Bulgaria. The subject of the analysis is the regulatory

framework of local taxes and fees, their place in the system of financial autonomy of municipalities

and the possibilities for their use as a mechanism for stimulating economic and social development

at the regional level. The study emphasizes the balance between the constitutionally guaranteed

autonomy of local self-government and the restrictions arising from the principles of legality,

equality and legal certainty.

The methodological approach is based on a formal-legal analysis of the current legislation,

including the Constitution of the Republic of Bulgaria and the Law on Local Taxes and Fees, as

well as a systematic and comparative method. A significant place is given to the analysis of case

law, through which the boundaries of the competence of municipal authorities in determining tax

rates and local fees are clarified. Additionally, elements of practical-applied analysis are used by

examining decisions and policies of individual Bulgarian municipalities regarding rate

differentiation, granting tax reliefs and determining the municipal waste fee.

The results of the study show that local taxes and fees perform a dual function – fiscal and

regulatory. On the one hand, they provide relative financial independence to municipalities and the

opportunity to plan sustainable public policies. On the other hand, by differentiating rates and

applying preferences, they can be used as a tool to promote investments, social initiatives and

environmental policies. The analysis of case law confirms that the autonomy of municipalities is

guaranteed, but not unlimited – any deviation from the legal framework is subject to judicial control

in order to protect the principles of equality and legal certainty.

The main conclusion of the study is that the effectiveness of local taxes and fees as a tool for

regional development depends on the presence of an integrated approach that combines a stable

regulatory framework, predictable case law, adequate administrative capacity and strategic planning

at the municipal level. In this regard, de lege ferenda proposals have been formulated, aimed at

expanding the permissible flexibility in setting tax rates, improving the methodologies for setting

local fees and more closely linking local financial policy with regional development strategies.

The study substantiates the thesis that local taxes and fees represent a key legal mechanism

for achieving sustainable regional development in the context of financial decentralization and

enhanced judicial control over the activities of local government bodies.