The policy of expanding the tax powers of local authorities leads to the optimisation of vertical financial relations in the public sector and improved economic efficiency and public well-being. Within the context of decentralization (administrative and fiscal one, in particular), regional structures should be equipped with access to profitable revenue-generating tax sources. The paper focuses on the applicability of personal income taxes and corporate taxes at a local level. The pros and cons of using the two types of taxes as sources of revenues to municipalities are analysed, the practice of different countries around the world in the sphrere is reviewed, and, based on those, the author proposes the thesis that taxes on labour incomes should be approached as local or parallel taxes, while there are no grounds for including corporate taxes in the category of local or parallel taxes.
