The analysis of financial autonomy: The case of Turkish municipalities

This thesis aims to determine and reveal the degree of fiscal autonomy of municipalities on Turkey by considering theoretical and empirical literature related to fiscal autonomy. By utilizing several criterions suggested to measure fiscal autonomy, it was determined that the degree of fiscal autonomy of Turkish municipalities is highly lower than those of OECD-member countries. In contrast, the literature on public finance presents strong arguments implying necessity of fiscal autonomy. Therefore, it was concluded that some measures should be taken to rise the degree of fiscal autonomy of Turkish municipalities. Some of political measures advised in the thesis can be summarized as follows: i) A qualified discussion platform to undertake the task of determining the optimal degree of fiscal autonomy that Turkish municipalities have to hold by considering the special conditions of Turkey should be constructed. ii) The constitution articles hindering fiscal autonomy of Turkish municipalities should be softened or abolished completely. iii) The tax sharing arrangement between government and municipalities should be revised. iv) Municipalities should be given a possibility to create additional financial sources to put an end to duty-income imbalance that Turkish municipalities face to. Finally, it should be stated that arrangements suggested above are handled in a detailed local administrative reform to encourage institutionalization of municipalities and to increase their technical competences would be more appropriate. Key words: local autonomy; fiscal autonomy; local administrations.