lg revenue generation revised
TRANSCRIPT
21 January 2015
Lg revenue generation Kandole
PatrickFCCA, CPA 2
Revenues represents an inflow of
financial resources into Lgs from
communities, Donors and GoU
Historic perspectives
Uganda was create basing on the 1894
This phenomenon introduced total supremacy of the British government over Uganda in matters of “….assessment and collection of taxes ….also the disposal of the revenues…..”
21 January 2015
Lg revenue generation Kandole
PatrickFCCA, CPA 3
Historic perspective
In 1920 the hut tax was reformed into the Poll Tax, a head tax for every adult male.
Poll Tax was reformed into a Graduated Tax, in 1954 for vertical equity.
The tax was abolished in 2005 due to its regressive regime. Was the largest revenue source
21 January 2015
Lg revenue generation Kandole
PatrickFCCA, CPA 4
Legal framework The Local Government (Rating) Act . The
Act provides for levy of rates on property by
local governments within their areas of
jurisdiction.
The Trade Licensing Act, This Act regulates
businesses and indicates rates of licenses payable
at each level of governance by business type.
The Public Health Act, The issuance of
trading licenses is subject to health and safety
regulations and inspections.
21 January 2015
Lg revenue generation Kandole
PatrickFCCA, CPA 5
Legal framework LGST - Guidelines 2009. These require
employers to deduct at source and remit tax
recoveries from employees to the appropriate
LGs.
The Land Act, in respect to ground rent and
premium.
LGA schedules
21 January 2015
Lg revenue generation Kandole
PatrickFCCA, CPA 6
Revenue sources
Local Revenue
1. Local service tax,
2. Property tax;
3. Market dues; Fees (user, fines, licenses,
permits, parking etc.);
4. Rents; Cess on produce;
5. Fines, penalties, Charges ;
6. Donations, Hotel tax
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Concept of revenue generation
The nature of revenue source depend on
the nature of service to be rendered.
Services may be categorized as pure
public goods, or mixed public goods
Mixed goods- education, housing,
recreation
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Lg re
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Patrick
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Funding community services
21 January 2015
Lg revenue generation Kandole
PatrickFCCA, CPA 9
Mixed Public goods
Such services may include education, where the general public benefits from services of a child who becomes a doctor and the individual and family have an exclusive benefit in terms of earnings and status.
Collection of garbage removes diseases from the community but it also rids your dwelling of discomforting smells and unwelcome flies.
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Lg revenue generation Kandole PatrickFCCA, CPA
Pure public goods
A situation where the impact of the service has far and wide externalities, outcomes that are beyond both the location of consumption and the real consumer of a service. {cost for construction of roads, immunization, Malaria control, construction of infrastructure}.
On a national scale this represents costs of national security, fire brigade services, justice, the Parliament.
Such services are ideally funded by mass taxation.
21 January 2015
Lg revenue generation Kandole
PatrickFCCA, CPA 11
Why LG revenues?
21 January 2015
Lg revenue generation Kandole
PatrickFCCA, CPA 12
Purpose:The purpose of
taxation (revenues) is to: ''
mobilise public resources for
management of public goods for
the public good.'‘
Rationale for revenue collection
GoU has a duty and obligation to provide
services to the population using all
available resources at its disposal.
It is a constitutional duty to pay taxes at
any level
21 January 2015Lg revenue generation Kandole PatrickFCCA, CPA 13
Rationale
Local governments have to meet the costs of social and infrastructure.
Changing population service demands have created pressure for more and better quality services leading to increased costs and service gaps.
21 January 2015Lg revenue generation Kandole PatrickFCCA, CPA
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Rationale
Revenues can only be adequate if there is a
positive relationship between revenue growth and
the demands made on it and in line with the cost
trend.
21 January 2015
Lg revenue generation Kandole
PatrickFCCA, CPA 15
Elements in administration
Enforcement - Following up tax defaulters,
the regular checks on licences, rates to ensure
that all those who should pay actually pay and
they pay the right amount.
21 January 2015
Lg revenue generation Kandole
PatrickFCCA, CPA 16
Elements in administration
Collection - Collection of revenue
from the taxpayers, mode and procedures for
payments
Sensitisation and Publicity-Involves holding
workshops and seminars for the revenue
collectors and the taxpayers and other forms of
awareness campaigns on the importance of
paying taxes say, radio announcements,
advertising, drama. The MoLG is working on a
strategy for mass revenue tax awareness campaigns
21 January 2015
Lg revenue generation Kandole
PatrickFCCA, CPA 17
Elements in administration
Collection - Collection of revenue
from the taxpayers, mode and procedures for
payments
Sensitisation and Publicity-Involves holding
workshops and seminars for the revenue
collectors and the taxpayers and other forms of
awareness campaigns on the importance of
paying taxes say, radio announcements,
advertising, drama. The MoLG is working on a
strategy for mass revenue tax awareness campaigns
21 January 2015
Lg revenue generation Kandole
PatrickFCCA, CPA 18
Revenue policy implementation
Rising sufficient revenues however is not the onlytask.
Principles of taxation
Equity, fairness-Inequity may raises levels ofunwillingness to pay if people feel they are beingasked to pay more than they can reasonably afford.
Elasticity
Adequacy of yield
Political/community acceptance-Revenues must beraised fairly. The perceived unfairness has oftenattracted political intervention.
Administrative feasibility
21 January 2015
Lg revenue generation Kandole
PatrickFCCA, CPA 19
21 January 2015
Lg revenue generation Kandole
PatrickFCCA, CPA 20
Despite the numerous
initiatives at all levels of
governance, Revenue
sufficiency at Lgs still
remains a challenge that
threatens to undermine
gains made by the
decentralization policy!
Challenges for LRRs
Low tax base
Poor payer attitude
Poor downward accountability
Low incomes
Poor legal framework- trading Act, LST
guidelines, Property rates
Tax administration challenges and costs
21 January 2015 21
Lg revenue generation Kandole
PatrickFCCA, CPA
Best practices
Contracting out
Tax payer convenience
Accountability
Direct banking of revenues
Fair assessment and collection
Fair enforcement
21 January 2015 22
Lg revenue generation Kandole
PatrickFCCA, CPA
Best practices
Link payment of taxes to levels of service delivery
and show that more revenues will result in better
and more services. Downward accountability and
value for money.
A clear visibility of services that are appreciated
by Taxpayers may result in increased willingness to
pay more.
Publication of plans, implementation framework. A
public accountability. Where the money went and
where it came from
21 January 2015
Lg revenue generation Kandole
PatrickFCCA, CPA 23
Accountability
Service visibility may
increase willingness to
pay.
Programme ownership
and participation
Do transfers increase
public motivation to pay
local taxes
Most development is
funded by CG Transfers!
21 January 2015
Lg revenue generation Kandole
PatrickFCCA, CPA 24
Show me the money!
Under-funded services due to
steep demand on current
finances. Revenues are
insufficient to meet costs of
garbage collection and
disposal, unattended roads,
unmet needs for classroom
space, luck of operation
and maintenance cash.
21 January 2015Lg revenue generation Kandole PatrickFCCA, CPA
25
How can we do better? Governance that
works.
Ensure tax payer convenience at payment, and
assessment
Promote fairness in assessment of taxes and
utilization of funds
Transparent dealings, accountability and
provision of relevant Value for Money services.
21 January 2015 26
Lg revenue generation Kandole
PatrickFCCA, CPA
Where is the money? Where is the impact of
policy? Where are we now? Is allocation poverty
sensitive?
High poverty levels, poor
redistributionBetter infrastructure, service delivery?
21 January 2015
Emerging issues in fiscal policy
Kandole Patrick FCCA,CPA, Msosc 27
Revenue enhancement strategy
from Corrective action results
Improvement in data management
Improved assessment and cost management
Improved tax payer relations
Improvement in control systems.
New revenue sources
21 January 2015
Lg revenue generation Kandole
PatrickFCCA, CPA 28
THE END
Local revenue generation
21 January 2015 29
Lg revenue generation Kandole
PatrickFCCA, CPA