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From Tirana to Durrës and Vlora, how concreting fills the coffers of municipalities

2026-09-07 18:34:00 / EKONOMI&SOCIALE ALFA PRESS
From Tirana to Durrës and Vlora, how concreting fills the coffers of

Kavaja, Himara, Vlora, Kamza, Durrës, Vora are the municipalities most dependent on the income generated by construction, as at least 40% of their own income comes from the Infrastructure Impact Tax (IIT) according to data dating back to 2025.

Tirana also has this indicator close to 40%.

The dependence is particularly high in municipalities that have experienced strong construction development in recent years. In Kavaja, for example, fiscal autonomy is calculated at 70% when TNI revenues are included, but drops to 40.6% if this tax is excluded, a difference of 29.4 percentage points.

Vlora, Kamza and Durrës also experience a sharp decline in fiscal autonomy when revenues from new construction are removed, which indicates that a significant portion of their local finances rely on a source closely linked to the construction cycle.

According to the Final Report on the Administrative-Territorial Reform 2.0, at the national level, the fiscal autonomy of municipalities for 2025 results in 43.1%, but drops to 32.4% if the Infrastructure Impact Tax is excluded.

This difference shows that a significant part of the fiscal autonomy of municipalities depends on the performance of the construction market. TNI is collected from new construction and, therefore, has a cyclical character.

Tirana also receives 37.5% of its income from TNI

According to the weight of TNI in their revenues, municipalities are divided into three groups. The group with the highest dependence on construction, where TNI accounts for at least 40% of their revenues, includes Kavaja, Himara, Vlora, Kamza, Durrës and Vora.

The second group includes municipalities where the TNI accounts for between 20% and 40% of their revenues. This category also includes Tirana, where the Infrastructure Impact Tax accounts for 37.5% of its revenues.

The third group includes 50 municipalities with lower dependence on construction. However, in many of them this is not necessarily related to a stronger financial structure, but to a generally lower base of own revenues.

Property tax remains below potential

While municipalities rely heavily on construction taxes, one of the most stable sources of local financing, property taxes, continues to have a low weight.

In 2025, this tax brought in about 8.1 billion lek, or only 18% of municipalities' own revenues. In relation to the economy, property tax revenues represent only about 0.3–0.4% of Gross Domestic Product, while the European average is approximately 1% of GDP.

Unlike TNI, which depends on the pace of new construction, the property tax relies on existing properties and can create regular and more predictable revenue for municipalities.

But its administration continues to have shortcomings. The fiscal property registry is not yet complete, not all properties are included in the billing, and the effective level of taxation remains low. As a result, some properties are either not taxed, or contribute less than their economic potential would allow.

The report considers strengthening the property tax as one of the main challenges of local finance reform. This requires completing the fiscal cadastre, expanding the billing base, updating property values, and improving administration by municipalities.

Increasing the property tax burden would reduce local government's dependence on the construction cycle and make municipal revenues more sustainable in the long term. /Monitor

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