Local Taxation and Fiscal Autonomy in Romania: Visible Public Services and Fiscal Trust in a Central and Eastern European Context

Abstract

Local taxation is not only a revenue instrument, but also a visible component of the relationship between citizens and local public authorities. This study examines Romania as a Central and Eastern European (CEE) case of local fiscal governance, focusing on the relationship between local fiscal autonomy, visible local public services and fiscal trust. The article adopts a comparative conceptual-empirical design based on a harmonized dataset covering eleven CEE countries over the period 2014–2024. The empirical analysis uses annual fiscal and budgetary indicators derived from Eurostat and European Commission data, while Eurobarometer and WVS/QoG indicators are employed contextually to interpret trust and tax morale. The results indicate that Romania is broadly close to the CEE average in terms of local government revenue and expenditure, but substantially below the regional average in the tax component of local finance. Local government tax revenue averaged 0.85% of GDP in Romania, compared with 1.89% in the CEE sample, while local tax revenue represented 9.34% of local government revenue, compared with a regional average of 18.03%. At the same time, Romania recorded visible local expenditure functions and slightly above-average recurrent taxes on immovable property, although the latter declined over the analysed period. Trust in local or regional public authorities increased from 39% in 2014 to 54% in 2024. The findings identify a structural tension between visible local expenditure responsibilities and limited local fiscal autonomy. The article therefore argues that local taxation in Romania should be interpreted as a governance relationship shaped by fiscal capacity, service visibility and trust, without claiming a direct causal effect on voluntary tax compliance.