One of the most important regional development instruments, which are used to decrease unfavourable difference among municipalities, is the local municipalities finance equalization system. Equalization of local municipalities finances have been realized through finance equalization fund, which takes into consideration differences in tax revenues and different needs of local municipalities that depend on demographical structure. It is very important to revise and improve the existing local municipalities finance equalization system because of its shortcoming. The new radically different model of local municipalities finance equalization is offered in the article. There are also evaluated the economical validity of this model and made conclusions about effectiveness of its introduction.