ABSTRACT
A new system of local taxation was introduced in Hungary in 1991, with the development of political and administrative systems of local government. This was the final stage of the fiscal reform process, initiated in the late 1980s, which has drastically changed intergovernmental finances. A general grant system was developed in 1990, which eliminated the important influence of the central budget on local government revenues. Local discretion in using national grants and other transferred revenues created the potential for higher municipal revenue. Local taxes are essentially regarded as tools for developing local autonomy, where municipal services are adjusted to meet local needs.
