The quadrupling of local tax revenues reveals the frightening proportions that construction is taking on

2026-03-19 08:24:00, Ekonomi CNA

The quadrupling of local tax revenues reveals the frightening proportions that

Accurate data on the area being granted for construction permits is becoming elusive as INSTAT does not include in its reporting the permits granted by the National Territorial Council, which in recent years has taken over the attributes for permits for high-rise buildings and tourist villages.

But the true extent of real building permits was recently revealed by the record increase in revenue from the infrastructure impact tax in the state budget that is levied on new permits.

According to official data from the Ministry of Finance, revenues from local taxes, represented by the infrastructure impact tax (IIT) for the period January-February 2026, reached a historical record, reaching 11.2 billion lek.

Revenues from this tax are more than four times higher than the previous year (2,586 million lekë in 2M-2025) and break every record of the last 30 years. It is even twice as high as the collections of 2022, when the record for building permits was 2.6 million square meters.

The infrastructure impact tax, which is paid by builders at the rate of 8% of the sales value for each permitted square meter in the capital and 4-8% in the districts, serves as the most accurate reflection of the volume of new construction. Revenues from this tax were so high in the first two months that they contributed to 63 percent of the additional revenues collected by the budget in this period.

Historical data shows that 70 percent of building permits are issued in Tirana. The year 2026 has doubled the peak of 2022, indicating that Tirana is going through an intensive phase of concreting that is not being fully declared in INSTAT data which does not reflect the flow of permits from the KKT.

Although the number of official building permits remains under-reported, the flow of taxes from building permits confirms that Albania, and especially Tirana, is experiencing a new and massive wave of construction, the scale of which is being minimized in front of public opinion.

Even on the coast, especially in the area of ??Durrës and Golemi and in the south, construction is going on endlessly, occupying almost every free space that was left.

Part of the infrastructure impact tax is paid at the moment the construction permit is obtained. Such a drastic increase in collections indicates that the actual construction area for which permits have been granted is much higher than the 1.3 million square meters reported by INSTAT in 2025. As collections have increased by 4-fold, logically the construction area has also followed the same trend.

Many of the permits granted in the downtown area where the reference sales price is high also affects the increase in income.

In 2016, the state budget collected only 681 million lek from the infrastructure impact tax in January-February, while in 2026, this figure is 16 times higher.

If receipts have increased by 333%, from 2.5 billion lek in the first 2 months of 2025 to 11.2 billion lek in the same period of 2026, this means that the volume of construction or the value of approved projects has increased by the same amount.

Since reference prices have increased, part of the increase comes from value, but the vast majority comes from new construction surface that is hidden in INSTAT's official reporting, but which is then paid into the state coffers.

Municipal revenues in the last decade have increased their dependence on the Infrastructure Impact Tax, but this dependence is now also dominating central government revenues.

Construction taxes brought two-thirds of the revenue increase for the second quarter

According to official data from the Ministry of Finance, in the first two months of 2026, almost two out of every three additional lek that entered the budget came from fees paid by builders for new permits.

The contribution of VAT to the total growth is minimal, accounting for only 4.3% of the weight of the increase, which shows that without the massive injection from construction permits, the budget growth would be anemic. Meanwhile, social and health insurance have managed to contribute 17% to this growth, ranking as the second most important source, but still far from the volume that infrastructure taxation is producing at the local level.

This structure confirms the high dependence of public finances on a single sector, while other taxes such as excise duties or customs duties have had an almost negligible impact on the overall 11.5% increase in revenues./ Monitor