Abstract
Modern organisation of the state has to be such that every citizen should be able to influence everyday's political decisions. However, this idealistic goal is difficult to achieve in practice. Therefore, we have to find an adequate system of distributing tasks among different levels of government. This distribution is further complicated by the fact that every task has to be financed by public revenues. This working paper has the goal to show the current system of local communities in Serbia and to show a way how to improve the work of local governments by receiving revenues for their obligations. According to the opinion of the authors, reorganisation of the current system of local governance in Serbia will lead to a more efficient bureaucratic apparatus.
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