This article presents the issue of local development. A special attention was paid to the territorial self-government and its instruments which enable to create the local policy. This paper also points out the main areas of territorial self-government influence and contains the analysis of financial aspects of communities in Poland and the structure of their income. This paper indicates the main factors that influence the quality of the community budget. It was analysed the external transfers that where directed from the state budget to communities in the years 1997-2006. This articles also shows the participation of the territorial self-government entity in the central tax (CIT and PIT) in the years 2004-2007.

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