Local authorities will be given the task of developing entrepreneurship from 1 July
On 1 July, amendments to the Local Government Organisation Act will enter into force, imposing an obligation on local authorities to set out the development directions and needs of the business environment in local authority development plans and county development strategies.
The current law does not impose a direct obligation on local authorities to develop the business environment.
One of the aims of local authorities is to promote entrepreneurship
The amendments will add a new provision to the law that formulates the general objective of a local authority. Among other things, the objective includes promoting the local business environment. However, the law does not prescribe specific activities for achieving this objective.
Adding entrepreneurship to local authority development plans
At present, local authority development plans must set out the long-term trends and needs relating to the development of the economic, social and cultural environment, the natural environment and public health.
From 1 July, long-term trends and needs must also be set out for entrepreneurship. This is an assessment obligation that supports the objective of promoting the local business environment.
Entrepreneurship in joint county planning and development strategy
The amendments will give local government units the task of jointly planning the development of the county, including its business environment, and steering the implementation of relevant strategies.
In addition, from 1 July, the long-term trends and needs of entrepreneurship must be set out in county development strategies. In practice, these trends and needs have already been analysed under economic development, but the legislative amendment will make this mandatory.
The Chamber supports the amendments
In the Chamber's view, the amendments are a step in the right direction, as they will increasingly require local authorities to consider how they can contribute to shaping the local business environment.
In order for local authorities to have even greater motivation to contribute to the development of the local business environment, the tax system should also be changed. Local authorities' tax revenue could depend more on how local companies are doing.
The Chamber has repeatedly proposed in the past that the distribution of personal income tax be changed so that half of the income tax received by local authorities would go to the local authority of the person's place of residence and the other half to the local authority of the person's place of work. Today, it goes only to the local authority of the person's place of residence.
You can read more about the version of the Local Government Organisation Act entering into force on 1 July here.