ln the survey Fiscal decentralisation and influence of local taxes on the development of tourist destinations in the Republic of Croatia, a prerequisite of successful fiscal decentralisation and level and structure of local taxes are analysed as requirements for efficient and sustainable development of the tourist sector. A vailable data are used and standard mathematic and statistical methods are applied. Croatian experiences with fiscal decentralisation and the influence of local taxes are compared with those in the most successful tourist countries and the implementation of relevant experience is proposed. There is a fundamental question: Why decentralize? The fundamental notion about decentralization is that local governments, closer to citizens, are likely to be better informed about citizens' needs and/or demands and therefore able to provide services more efficiently than the central government. Similarly, local taxes should be under the authority of a local government that is well informed about the possibilities and needs of its people. Fiscal decentralisation could be an important incentive to economic development and growth and can enable higher equity and accessibility of services and could also mean more careful and frugal spending of public money. In the analysis of fiscal decentralisation special attention is given to tourist destinations. There is an obvious need that units for local government to have the right to make independent decisions on raising and collecting taxes. This right should include both a possibility to independently determine the level of a tax and also to distribute and direct public revenues. Although there are significant differences in local tax structures the majority of tourist destinations in Croatia have the same tax structure, which is relatively complicated but not generate sufficient revenue. Thus, it is necessary to simplify the tax system and make it more efficient. In the survey particular attention is paid to the importance of non-tax revenues (visitor's taxes, contribution, concessions). Non-tax revenues are incomes of local units that are earmarked for specific purposes. The level of non-tax revenues is independently determined by local units, which are also responsible for collection. The central state only stipulates maximum levels of non-tax revenue rates introduced by local units. Main non-tax revenues are utility fees and contributions used by local units for financing the construction and maintenance of utility infrastructure. In Croatia there are also numerous fees and allowances introduced by public companies. In the research particular attention is paid to other determinants of tourist destinations: personal and company income tax, surtax and value added tax. The analysis of various possibilities of allocation of personal and company income tax in Croatia shows that it is possible to establish an appropriate and fair distribution mechanism of common tax yields. In our opinion, the best approach is distribution of taxes according to the number of population. For successful realization of fiscal decentralization, there must be clear delegation of responsibility and authority on the level of central and local government. Furthermore, incentives in the implementation of efficient procedures of service provision, mobilization of financial sources and co-ordination are required. Finally, local taxes should be a constant and predictable source of revenues for local bodies to realize local priorities, particularly the development of tourist destinations.