Liechtenstein Communes Hit Out At Budget Cuts

by Ulrika Lomas, Tax-News.com, London

06 November 2002

Following the Liechtenstein government's announcement late last month that it intends to decrease the share of taxes on capital and proceeds received by the jurisdiction's eleven communes, and will additionally be reducing the fiscal compensation received by the local authorities from 15% to 14%, the mayors of the communes have pledged to fight this 'breach of the rules'.

The proposals were put forward in October as temporary measures designed to stop the government deficit from swelling beyond its predicted level of 8 million francs in 2003. According to Head of Government, Otmar Hasler, the reduction in tax revenue and government spending was not expected to adversely affect the local economies of any of the communes.

However, according to a report from the Liechtensteiner Vaterland news service, if the government's cost cutting plans go ahead: 'two of the eleven communes will go into the red next year'.

The report continued: ' The covering degree of the communes of Gamprin-Bendern and Planken would drop below 100% also if the finance policy remained unchanged. Therefore, the mayors fight against the government's plans.'

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