Supporting subnational governments to mobilise own-source non-tax revenues for investment

Europe’s investment needs are estimated at around €750 billion per year, according to the Draghi report on EU competitiveness. While subnational governments deliver around 53% of public investment in the European Union, their capacity to pay for future investment needs is constrained. Meeting future investment needs will require helping subnational governments mobilise available revenue sources. 

While taxes and transfers remain the backbone of subnational government finances, opportunities to further mobilise these sources are often limited. Own-source non-tax revenues (OSNTR), by contrast, represent an under-examined area of subnational finance and have the potential to strengthen fiscal resilience and support investment needed. 

This project will explore how OSNTR are currently regulated and mobilised by subnational governments across Europe. It will identify barriers to their mobilisation and seek opportunities for reform and capacity building. It will facilitate knowledge sharing to support subnational governments strengthen revenue mobilisation. 

Own-source non-tax revenues (OSNTR) are revenues that subnational governments generate outside of taxes and inter-governmental transfers. They include sources such as utility fees, parking and rent from municipal properties, among other sources. 

OSNTR have been categorised into three areas:

The OECD is undertaking an in-depth study on the use of OSNTR across a representative selection of EU member countries. The project aims to deepen knowledge on OSNTR and facilitate knowledge sharing across the EU and OECD. Ultimately it aims at supporting subnational entities, in full compliance with national institutional arrangements, to optimise their capacity to raise revenues to foster their economic development.

The project includes eight case studies that will highlight a diversity of practices and contexts across Europe. Each case study will focus on OSNTR mobilisation at a specific level of government within the single country. Case studies will be informed by workshops with a sample of governments.