Fiscal Equalisation in Polish Municipalities (Example of Lower Silesian Voivodship)

Corrective and compensatory payments for local government units have been one of the most frequently discussed issues related to the financing of local government units (LGU) for years. The question of whether the corrective payments burden the budgets of the payers to an adequate degree, and whether they constitute a sufficient source of additional income for the beneficiaries of these payments, remains open. The paper aims to present the volume of corrective cashflows in LGUs in 2018 and to examine the share of these payments in total income or in the communes’ total expenditures in 2017. The article provides basic information on systems of fiscal equalisation and the reasons for their implementation, particularly in Poland. The article discusses the effects of the system, on the example of the municipalities (communes) of the Lower Silesia Voivodship. The summary indicates the shortcomings of the current system and proposed changes. The data from the Ministry of Finance and the database of the Local Data Bank of the Central Statistical Office (GUS) were used for the calculations.