The paper explains the classification of local and regional self-government units, their authorities along with responsibilities, and one conclusion would be that all local and regional self-government units need funding with the intention to functionally carry out their obligations and meet the citizens' needs on time. That being the case, this paper discusses the ways of financing these units (whether through their own sources of revenue, shared taxes, shared revenues, and similar), the law on their financing, also the budget law. Using the financial data of the Otok municipality and with the help of the Law on Local Taxes, all types of municipal taxes will be explained, which include: surtax on income tax, tax on the use of public land, real estate transfer tax, tax on holiday homes, consumption tax and even tax on enterprise. With the analysis of these taxes, Otok municipality generates the highest revenue from income tax and surtax. Revenues from other taxes do not come close to the amount generated from income tax and surtax and it can be said that revenues from taxes on the use of public land and enterprise taxes are negligible for the municipality's budget. Considering the municipality's expectations that surtax revenue would of increased, it is interesting to see how the municipality will compensate for the loss of that amount with the new tax reform.