Management Of Funds in Lira District Local Government (Ldlg)

ABSTRACT Local Governments have been empowered by the Central Government in matters of development and financial management; Revenue collection and management has been characterized with many problems like unrealistic budgets due to lack of accurate data and updated revenue registers, poor and incomplete enumeration and assessment which has led to poor revenue collection and management and big revenue budget deficit. This study therefore seeks to determine the different sources of Revenue in Lira district, investigate whether the process of revenue collection and accountability are transparent and investigate the level of revenue improvement. The study adopted a case study approach so as to generate data from the widest range of respondents who take responsibility in setting guidelines and implementing them. The study employed two instruments of data collection namely; questionnaires and documentary review. The study findings revealed diversified sources of revenue collection in LDLG All the solicited responses (93%) acknowledged a number of sources of revenue. According to the responses captured by the researcher within a range of financial years 2004 to 2007. The sources included: Graduated tax, property tax, ground rent, licenses, vehicle parks, markets, government grants, and external funding from the donors. This research study identifies that local revenue is central to the functioning of independent and accountable local government in Uganda. Therefore actions in the following areas which would assist in re-enforcing the core principles of managing funds are recommended. The local government finance commission should conduct a study to determine the funding levels required to have service delivery in local governments to be realistic; The local government finance commission should conduct a study about the modalities of transfer below the district and the capacities of lower local governments to manage the increased funds be enhanced. A concerted effort needs to be made to inform the public of the importance of local revenue and what local taxes are used for. Greater scrutiny needs to be placed on budget discipline and monitoring of local government adherence to their budgets. 

TABLE OF CONTENTS

PAGE

DECLARATION .IV

APPROVAL

DEDICATION VI

ACKNOWLEDGEMENTS vii

ABSTRACT

CHAPTER ONE 1

1.0. INTRODUCTION 1

1.1. BACKGROUND TO THE STUDY 1

1.2. STATEMENT OF THE PROBLEM 2

1.3. PURPOSE OF THE STUDY 3

1.4. OBJECTIVES OF THE STUDY 3

1.5. RESEARCH QUESTIONS 4

1.6. SIGNIFICANCE OF THE STUDY 4

CHAPTER TWO 5

2.0. LITERATURE REVIEW 5

2.1. INTRODUCTION 5

2.2. THEORETICAL PERSPECTIVE 9

2.3. ASPECTS OF FINANCIAL MANAGEMENT AND CONTROL 12

2.4. INSTITUTIONS OF FINANCIAL MANAGEMENT AND CONTROL 14

2.4.1. THE FINANCE COMMITTEE 14

2.4.2. THE LOCAL GOVERNMENT ACCOUNTS COMMITTEE 15

2.4.3. THE LOCAL GOVERNMENTS TENDER BOARD 16

2.4.4. THE LOCAL GOVERNMENT COMMISSION 16

2.4.5. FINANCIAL AND REVENUE REGULATIONS 17

2.4.6. BUDGETING BY LOCAL GOVERNMENT UNDER THE POLICY 18

2.5. ENUMERATION AND ASSESSMENT 20

2.5.1. TAX ADMINISTRATION, REVENUE COLLECTION AND MANAGEMENT 21

2.5.2. CAUSES OF DECLINE IN REVENUE 22

2.5.3. FACETS AND MEASURES OF TRANSPARENCY IN TAX ADMINISTRATION AND TAX

REDUCTION 22

2.5.4. MANAGEMENT OF FUNDS AND REVENUE COLLECTIONS RELATIONSHIPS

ANALYSIS 23

2.6. CHALLENGE OF REVENUE COLLECTION AND MANAGEMENT 24

CHAPTER THREE 32

3.0. METHODOLOGY 32

3,1. INTRODUCTION .32

3.2. RESEARCH DESIGN 32

3.3. RESEARCH ENVIRONMENT 32

3.4. RESEARCH SUBJECTS

3.5. SAMPLE SIZE 33

3.6. RESEARCH INSTRUMENTS 33

3.7. DATA COLLECTION PROCEDURE 34

3.8. DATA PROCESSING AND ANALYSIS 34

CHAPTER FOUR 36

4.0. PRESENTATION,ANALYSIS AND INTERPRETATION OF DATA 36

4.1. INTRODUCTION 36

4.2. THE ESTABLISHMENT OF DIFFERENT SOURCES OF LOCAL GOVERNMENT

REVENUE IN LDLG 36

FIGURE 1: ESTABLISHMENT OF DIFFERENT SOURCES OF LDLG 37

4. 3. WHO DOES TAX ASSESSMENT AND WHETHER TRANSPARENCY AND

ACCOUNTABILITY ARE BEING PROMOTED IN COLLECTION AND MANAGEMENT OF

REVENUE 38

4. 4. THE COMPOSITION OF DIRECT AND INDIRECT TAXES IN LDLG 39

4. 5. QUALIFICATIONS OF TAX ASSESSORS 40

4. 6. THE MODE OF TAX ASSESSMENT IN LDLG 42

4. 7. HOMOGENEOUS APPLICABILITY OF TAX ASSESSMENT IN LDLG 43

4. 8. TAX COLLECTORS IN LDLG 45

4.9. INSTITUTIONS THAT MANAGE AND CONTROL FINANCES UNDER LOCAL

GOVERNMENT 46

4. 10, THE WAY INSTITUTIONS OPERATE 46

4. 11. THE EFFECTIVENESS OF INSTITUTIONS MANAGING AND CONTROLLING

FINANCES UNDER DECENTRALIZATION POLICY 48

4.12. JUSTIFICATION FOR NOT EFFECTIVE AND EFFECTIVE 50

4.13. THE TREND OF REVENUE COLLECTION SINCE THE INTRODUCTION OF

DECENTRALIZATION POLICY IN 1993 51

CHAPTER FIVE 53

5.0. SUMMARY,FINDINGS, CONCLUSIONS AND RECOMMENDATIONS 53

5.1. INTRODUCTION 53

5.2. FINDINGS 53

5.3, CONCLUSION 64

5.4. RECOMMENDATIONS 64

REFERENCES 68

APPENDIX I: LETTER OF INTRODUCTION .74

APPENDIX 11: MAP OF UGANDA SHOWING LIRA DISTRICT 75

APPENDIX III: QUESTIONNAIRE 76

APPENDIX IV: CALCULATION FOR THE CONTENT VALIDITY. INDEX (CVI) OF THE

INSTRUMENTS 80

APPENDIX V: CALCULATION FOR THE RELIABILTY OF THE INSTRUMENTS USING THE

CRONBACH’S ALPHA CORRELATION CO-EFFICIENT 82

APPENDIX VI: LDLG LOCAL REVENUE PERFORMANCE 2006-2007 83