In this empirical study, author tries to scrutinize the formation, flow of the local budget in Uzbekistan. However, in world practice, it is emphasized that it is appropriate to follow the following principles when attaching taxes to the budget in accordance with the criteria for ensuring economic efficiency: a) Taxes assigned to the republican budget should be considered taxes with a high multiplier effect in the system of macroeconomic regulation of the countrys economy b) The system of income distribution between different social strata of the population and progressive taxes regulating income inequality should be included as a source of income of the Republic budget c) Taxes based on a strong disproportion in the distribution of the tax base are not highly effective in the policy of vertical equalization of sub-budgets. Therefore, it is recommended to attach such taxes as a source of revenue for the central government budget d) Naturally, in the system of vertical equalization for local budgets, the tax base of highly effective taxes should not be highly mobile and should be relatively evenly distributed across regions. Based on these principles, continuation of the policy of attaching taxes to local budgets will, first of all, create opportunities to ensure their financial stability by strengthening the revenue base of local budgets.