Local Government History
The United Arab Emirates is a federation comprised of seven formerly autonomous emirates. In 1971, the kingdoms united to form the new state of the UAE. The national constitution delineates a division of power between the federal government and the governments of each emirate. The central government is responsible for foreign policy, defense, education, public health, the communications infrastructure, and immigration and territorial issues. Powers not given to the federal government are reserved in the constitution for the individual states of the UAE. In practice over the past 30 years, the federal government has assumed additional responsibilities such as water and the judiciary system where local governments have been willing to relinquish power.
The degree of local governance varies in accordance with the size of the emirate and the size of the local community. In Abu Dhabi, the largest emirate, there is a parallel government to the federal structure including a consultative council and public administration. The city of Abu Dhabi is divided into two municipalities that provide a variety of services including water, electricity, public works, finance, and customs. The municipality of Al-Ain within the emirate of Abu Dhabi also has a strong local government. In rural areas, the smaller and less developed emirates, the federal government tends to take a larger role in the provision of public services.
Municipal and Local Government Budgets
There is no federal tax system in the UAE. Each of the emirates is supposed to contribute half of its income to the federal government, though in practice only Abu Dhabi and Dubai fund the federal budget, and at lower rates than half of their income. The two largest emirates have traditionally funded the federal budget deficit with additional contributions from their local income. There are no direct taxes in the UAE; the emirates each earn their revenue from oil income, customs duties, and other fees.
Local Government Budgetary Reform
As a participant in the Government Data Dissemination System of the International Monetary Fund, the UAE is being encouraged to develop a more transparent consolidated budget that clearly indicates local government expenditures.