The total amount of the local allocation is set at a fixed percentage of the five national taxes. It is determined on a macro basis, based upon estimates of standard revenues and expenditures in the local finance program.

Allocations to individual entities are determined on the basis of standard financial needs subtracted by standard financial revenues. Standard financial needs are calculated as general revenue sources in the local public finance program. (Standard finance revenues made up 60% of the FY05 targeted general revenues sources of \42.0trn and ordinary local allocation tax 40%.)