Local government authorities’ dependence on the Treasury for expenditure funds is currently estimated to be between 80 to 90 per cent.
Traditional revenue streams such as property tax, service levies and other forms of taxes that were formerly being collected by local governments are currently under the central government’s control.
As a result, local governments have become overly dependent on the Treasury for developmental projects. In order to be self-sustaining, local authorities should think outside the box and initiate developmental projects that will act as a revenue source, an alternative that will help boost their economies and also help cut back on the heavy dependence on the central government.
Due to the squeeze in funding from local sources, local governments need to be more creative in looking for alternative revenue streams. However, they should avoid imposing taxes that are considered a nuisance.
Following the central government’s decision to take over collection of some municipal taxes, including those for billboards and properties, local governments should not resort to desperate measures in a bid to bridge the gap in local revenues.
The central government is currently implementing a multi-billion shilling project aimed at creating more revenue sources for local governments. This is the perfect opportunity for local governments to come up with developmental projects that will help them stand on their own feet.
According to the Revenue Strategic Project manager, Mr Iddi Mshili, if successful, the project may cut dependence on the central government by up to 50 per cent come 2025. Local governments have been cautioned to present project ideas that are aimed at boosting their revenues.
The Revenue Strategic Project, which was rolled out in the 2017/2018 financial year, should be fully utilised in order to enable local governments to run their affairs without depending on external funding from the central government.