SUMMARY
In a regionally heterogeneous country like Estonia, it is a difficult task to create a local government revenue structure that guarantees even supply of public services across the entire country and, at the same time, revenue autonomy for the municipalities. In the theoretical part of the current article the suitability of different sources of own revenues are analysed in the context of Estonian municipalities. The empirical part of the article compares the financing principles of Estonian municipalities with other EU countries. Finally, the proportions of different own sources of revenues in the budgets of Estonian local governments are examined and suggestions are made for changing the current system