LOCAL REVENUE AND SERVICE DELIVERY IN LOWER LOCAL GOVERNMENT:

A CASE STUDY OF KABEREBERE

TOWN COUNCIL ISINGIRO DISTRICT

BY

MUTAKIRWA MARTIN

11/BSU/BBA/180

A RESEARCH REPORT SUBMITTED TO THE FACULTY OF BUSINESS AND

DEVELOPMENT STUDIES IN PARTIAL FULFILLMENT OF THE REQUIREMENT

FOR THE AWARD OF A BACHELOR'S

DEGREE IN BUSINESS ADMINISTRATION OF

BISHOP STUART UNIVERSITY

MAY, 2014

2

DECLARATION

I MUTAKIRWA MARTIN declare that this Research Report is my own

work and it has never been submitted for any academic award

in any Institution or University.

Signature …………………………………………

MUTAKIRWA MARTIN

11/BSU/BBA/180

Date ………………………………………….

ii

APPROVAL

This research under the title” Impact of local Revenue on

Service Delivery in Local Governments” was administered and

presented for examination with my approval as a University

Supervisor.

Signature……………………………………………………..

Ms. KYOKUTAMBA JEAN HAPPY

SUPERVISOR

Date………………………………………………………….

iii

DEDICATION

This study is dedicated to my parent Mr. Karetina Eldard, Mrs.

Bakehenda Florence, my brothers and sisters: Muzoora.M,

Bengana .A. Ninsiima Pheonah. You have been an inspiration to

me through your hard work, your commitment, your love for your

children, and wisdom. Mommy, without you, I would not be what

I am.

Thank you.

iv

ACKNOWLEDGEMENT

I wish to express my sincere appreciation towards all those

who greatly contributed to the successful completion of this

research: - My Supervisor Ms Kyokutamba Jean Happy for her

patience, calmness, guidance, and tireless encouragement

towards the writing of this research report.

I am grateful to my parents Mr. Karetina Eldard, Mrs.

Bakehenda Florence for their endless support extended to me

throught this course.

I thank all my friends in and outside studying circles who

have always supported me towards the report evolvement and the

entire course. In this special regard I extend special

gratitude to my friends Shabaruhanga Deus, Bright, Rosette,

Falid, Ali and Doreen whose advice and support have been so

much instrumental in my pursue of this course.

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I wish to thank the Management of Kaberebere Town Council

Local Government for having greatly contributed to this study

by giving me both moral and technical support.

TABLE OF CONTENTS

DECLARATION.................................................ii

APPROVAL...................................................iii

DEDICATION..................................................iv

ACKNOWLEDGEMENT..............................................v

LIST OF TABLES..............................................ix

LIST OF ACRONYMS.............................................x

ABSTRACT....................................................xi

CHAPTER ONE:INTRODUCTION.....................................1

1.1 Background of the study..................................1

1.2 Statement of the problem.................................4

vi

1.3 Purpose of the study.....................................4

1.4 Objectives of the study..................................4

1.5 Research questions.......................................5

1.6 Scope of the study.......................................5

1.6.1 Subject scope..........................................5

1.6.2 Time Scope.............................................5

1.6.3 Area scope.............................................5

1.7 Significance of the study................................6

CHAPTER TWO:LITERATURE REVIEW................................8

2.0 Introduction.............................................8

2.1 Methods of revenue collection............................8

2.2 How revenue collected has helped in service delivery in

local governments...........................................10

2.3 The challenges faced in revenue collection..............14

2.4 Solutions to the challenges faced in revenue collection. 19

2.5 Conclusion..............................................22

CHAPTER THREE:RESEARCH METHODOLOGY..........................24

3.0 Introduction............................................24

3.1 Research Design.........................................24

3.2 Study Area..............................................24

3.3 Study variables.........................................24

3.4 Study population........................................24

3.4 Sampling Design.........................................25

3.4.1 Sample size...........................................25

3.4.2 Sampling Selection....................................25

3.5 Instruments of Data Collection..........................26

3.5.1 Data Sources..........................................26

3.5.2 Questionnaires........................................26

3.6.2 Interview Guides......................................26

3.6.3 Documentary review....................................26

3.6.4 Survey method.........................................26

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3.6.5 Interviews............................................26

3.7 Methods of data handling................................27

3.7.1 Data processing.......................................27

3.7.2 Editing...............................................27

3.7.3 Coding................................................27

3.7.4 Tabulation............................................27

3.7.5 Reliability and validity..............................27

3.8 Data analysis...........................................28

3.9 Research Procedure......................................28

3.10 Limitations of the study...............................28

CHAPTER FOUR:PRESENTATION, ANALYSIS AND INTERPRETATION OF

RESEARCH FINDINGS...........................................29

4.0 Introduction............................................29

4.1 Social demographic characteristics......................29

4.1.1 Gender of the respondents.............................29

4.1.2 Marital status of the respondents.....................30

4.1.3 Age of the respondents................................31

4.1.4 Level of education of the respondents.................32

4.2 Methods of Local revenue collection.....................33

4.2.1 Methods of local revenue collection in Kaberebere Town

Council, Isingro District...................................33

4.3 Contributions of local revenue towards service delivery in

Kaberebere Town Council, Isingro District...................34

4.4 Challenges faced in revenue collection in Kaberebere Town

Council, Isingro District...................................36

4.5 Measures to overcome challenges faced in revenue

collection in Kaberebere Town Council, Isingro District.....38

4.6 Relationship between local revenue and service delivery. 39

CHAPTER FIVE: DISCUSSION OF THE STUDY FINDING, CONCLUSIONS AND

RECOMMENDATIONS.............................................41

5.0 Introduction............................................41

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5.1 Discussion of the study finding.........................41

5.1.1 To find out the methods of revenue collection in

Kaberebere Town Council.....................................41

5.1.2 To find out how revenue collected has helped in service

delivery in local governments...............................41

5.1.3 To find out the challenges faced in revenue collection

in Kaberebere Town Council..................................41

5.1.4 To document possible solutions to the challenges faced

in revenue collection.......................................42

5.2 Conclusions.............................................42

5.3 Recommendations………………………………………………………………………..42

5.4 Suggested areas for further research....................43

REFERENCE...................................................44

APPENDIX 1..................................................47

Appendix II: Introductory Letter............................50

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LIST OF TABLES

Table 1: Showing sample size................................25

Table 2: Gender composition of respondents..................30

Table 3: Marital status of respondents......................30

Table 4: Age distribution of respondents....................31

Table 5: Level of education of the respondents..............32

Table 6: Methods of local revenue collection in Kaberebere

Town Council................................................33

Table 7: Methods used to collect local revenue in Kaberebere

Town Council, Isingro District..............................33

Table 8: Has revenue collected helped in service delivery to

Kaberebere Town Council, Isingro District?..................35

Table 9: The services that have been delivered to Kaberebere

Town Council................................................35

Table 10: The challenges faced in local revenue collection in

Kaberebere Town Council, Isingro District...................36

Table 11: The challenges faced in revenue collection

Kaberebere Town Council.....................................37

Table 12: Measures to overcome challenges faced in revenue

collection..................................................38

Table 13: Relationship between local revenue and service

delivery....................................................39

Table 14: Showing whether there is a relationship between

local revenue and service delivery..........................40

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LIST OF ACRONYMSLC Local Council

DRO District Revenue Officer

PEAP Poverty Alleviation Program

LREP Local Revenue Enhancement Plan

DDP District Development Annual Plan

LGDP Local Government Development Program

MBFP National Budgeting Framework Paper Process

LGDP Local Government Development Program

ULGA Uganda Local Government Association.

MTEF The Medium Term Expenditure Frame Work

NAADS National Agricultural and Advisory Services

UNHCO Uganda National Health Users and Consumers

Organization

LGFAR The Local Government Finance and Accounting

Regulations

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DENIVA Development Network of Indigenous People Voluntary

Organization.

ABSTRACT

This research was aimed at the role of local revenue

collection and service delivery in lower local government in

Kaberebere Town Council- Isingro District. The study was based

on three main objectives which were:- to find out the methods

of revenue collection in Kaberebere Town Council, to find out

how revenue collected has helped in service delivery in local

governments and to find out the challenges faced in revenue

collection in Kaberebere Town Council. The researcher obtained

a letter of introduction from Bishop Stuart University

research unit, which was presented to the officer in charge of

Kaberebere Town Council. Local Government where the

researcher’s case study was based. The researcher used both

qualitative and quantitative research designs with a sample of

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50 respondents who included the staff of Kaberebere Town

Council. Local government. Qualitative data was obtained

through questionnaires, interviews and observation while

quantitative data was obtained through computation and

analysis.

The research findings showed the challenges faced by the

District Local Government such as; political interference, tax

evasion and tax avoidance, how revenue collection could be

improved and how local revenue had a strong impact on service

delivery in local governments. Using Pearson’s correlation of

coefficient it signified that revenue collection had a strong

positive correlation with service delivery.(r=0.42). The

researcher concluded that local governments have challenges in

revenue collection but such challenges were not beyond

control. Basing on the findings the researcher concluded that

revenue collection has a great impact on service delivery.

This could be evidenced with poor service delivery with a

decline local revenue collection and improved service delivery

with a rise in revenue collection. However the researchers

recommended measures to improve on revenue collection like

training tax collectors, sensitizing the masses. The

researcher suggested that future studies should be conducted

to analyze any other factors that affect revenue collection as

well as service delivery in local governments.

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CHAPTER ONE

INTRODUCTION

1.1 Background of the study

In 1992, Uganda adopted the decentralization policy that

sought to establish a system of governance underpinned by

strong local governments. Subsequent constitutional and legal

reforms established districts and the sub-counties as key

pillars of local governments through which effective service

delivery and local governance is to be attained. Although

decentralization has been pursued over the last two decades,

there is widespread consensus that the performance of local

governments is less than desirable. Decentralization in

Uganda started in 1993/94 with the main objective of building

a more democratic government that is responsible and

accountable to the public to promote capacity building at the

local level and introduce local choice into service delivery

fostering a sense of local ownership, (langseth, 1996).

According to Local Government Act 1997, defines local revenue

as the sub total of all categories collected from a number of

sources like market dues, fines and penalties, parking fees.

In conformity with the local government, (resistance councils)

statue NO.15 of section 44 of 1993, the 1995 constitution of

the republic of Uganda provided a decentralization system of

governance with the districts at the top of the administrative

units. They are governed by the Constitution of 1995 of the

republic of Uganda and local government Act of 1997.

According to schedule 2 of the Local Government Act 1997 gives

mandate to local governments to collect local revenues from

their own sources such as property tax, licenses, permits,

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fines and penalties, market dues, parking fees, and take

financial decisions while complying with financial and

accounting regulations 1998 guide of the financial operations

and specifies decentralization policies, rules and

regulations. Local governments were empowered to carry out

proper planning decisions at budget level, do complete

enumeration and assessment of taxes for financial

decentralization to succeed in improving local revenue

collection.

Article 176 (2) of the constitution of the republic of Uganda

1995, schedule 2 of the local government Act (1997) and

sections 97 and 98 of local governments were to offer services

including and not limited to education, medical and health

services, sporting facilities while using their local revenue

collection forces which Ms. Cotilda Mbabazi secretary for

Finance on June 12th, 2009 said that they contribute 0.9%

funding their budget (New Vision June 12, 2009). The revenue

base of local governments has diminished and they are now

heavily dependent on central government disbursements mainly

through conditional grants. The quality of services is less

than desirable as key services such as health care, water and

sanitation, education and agricultural advisory services

remain dismal. Yet, there is no evidence that the citizens who

are the intended beneficiaries of the decentralization system

are able to demand for accountability and better performance

from their elected leaders. There has been a growth in the

number and diversity of revenue transfer mechanisms from

central government and donors, which has been a matter of

growing concern in both central and local governments. Many of

these mechanisms are not well adapted to the decentralized

xv

framework, resulting in local governments given little power

over the allocation of resources and little involvement of

lower local governments in decision-making.

The Local Government Finance Commission has focused on three

areas of improvement in order to enhance local revenues. These

are; improving co-ordination amongst central institutions;

facilitating policy debate to inform the Local Government

Finance Commission and Ministry of Local Government on policy

and legal improvements; and enhancing the capacities of local

governments to raise more local revenues by encouraging them

to implement best practices. To facilitate the implementation

of these revenue enhancement objectives, the Local Government

Finance Commission established a Local Revenue Enhancement

coordinating Committee (LRECC) in April 2002. The main tasks

of the LRECC are to co-ordinate and support the development of

conducive decisions and policies regarding local revenue and

to enhance the capacities of local governments to effectively

and efficiently generate and manage sustainable local

revenues.

Service delivery is defined by Oboth (2001) noted that in as

far as the Local Government Act, the constitution and any

other statutes that are studied, there is no definition of the

phrase (service delivery) either deliberately or ignorantly.

However he said, Service is a system or arrangement that

supplies public needs. Whereas delivery is periodical

performance of a service. Therefore service delivery is a

system or arrangement of periodical performance of supplying

public needs. Helmsing (1995) in his study defines service

delivery as a deliberate obligatory decision by the elected or

xvi

appointed officials to serve or deliver goods and services to

the recipients. Heskett (1987) defines service delivery as an

attitudinal or dispositional sense, referring to the

internationalization of even service values and norms.

According to National Service Delivery Survey (2008), the

government has the obligation to provide services to its

citizens and to steer economic growth and development through

the provision of public services. The public service is the

main implementing machinery for national development

programmes and specifically, the delivery of public services.

It is therefore very important for the public service to

monitor and evaluate the delivery of public services and to

obtain feedback from service recipients, regarding their

efficiency and effectiveness. The National Service Delivery

Survey (NSDS) has been institutionalized by Government as a

key instrument to that effect. Under the Public Service Reform

Programme, surveys are conducted in the sectors of education,

health, road infrastructure, water and sanitation, agriculture

and governance among others.

Local revenue collection helps to achieve service delivery in

the Kaberebere Town Council by co-funding development projects

for example the child and early nutrition project in the

health sector, Kaberebere Town Council development programmes

and plan for modernization of agriculture grants for both

higher and lower local government though sometimes local

revenue collections are used to fund stand alone projects for

the local population. Service delivery is defined as the

process of extending basic services like education, health

care, water, transport and communication where the end users

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are the public or the local people within the country. In

other words, the locals are the beneficiaries (Ray Tomkinson

2007 page 211) Kaberebere Town Council local government budget

is said to dominated by health, education, and road sector

according to the secretary of finance Ms Cotilda Mbabazi on

June 12 2009, she said that 95%funding were expected form

government transfers, 4.1% from donors and NGOs co-sponsorship

while only 0.9% was expected from local revenue collection

because tax collectors face external political interventions

to make them deviate from the laid down local revenue

collection procedures and regulations leading to tax evasion

and tax avoidance hence poor revenue collection. Despite

rapid urban growth, most of sub-Saharan Africa’s population

continues to live in rural areas. For that reason alone, local

government in rural Africa – and its capacity to deliver

public goods and services – merits both investment and

interest. Moreover, it is in the rural areas of Africa that

the poorest live and where the greatest challenges for poverty

reduction exist – focusing on poverty reduction in Africa

almost invariably implies the need to pay special attention to

the rural dimensions of poverty. If local government in rural

Africa is to be relevant, accountable and thus deliver

appropriate services, then, it must also face up to the

challenges of poverty reduction.

1.2 Statement of the problem

It is evident that the single most important source of revenue

for local governments in Uganda is transfer from central

governments. While a high proportion of central transfers by

itself do not injure the autonomy of the local government, the

conditions frequently attached to these transfers undermine

xviii

genuine local decision making. The majority of these transfers

are conditional. (Ahmad E, 2006). This, coupled with the low

revenue base, threatens the autonomous functioning of local

governments. Find that the level of debt financing in local

governments’ budgets is very low. This is due to the stringent

cap imposed on them by the law which forbids local governments

borrowing from exceeding 25% of locally generated revenue.

This has contained the indebtedness of local authorities, but

at the same time it has eliminated the ability of local

governments to access additional resources to finance service

delivery that is based on local needs.

Despite the fact that Kaberebere Town Council collect revenue

from various sources such as market dues, fines and penalties,

parking fees, property taxes, license and permits and others

in order to carry out service delivery for its residents,

expenditure on service delivery for its local population both

at district and lower local government remains very low

(Auditor Generals Report 1998/1999, 2009/2010, 2011/2012). The

problem if not addressed may undermine the autonomy of the

local government under the decentralization process since

reliance will only be Donations and the central government

transfers (Oriaro et al 1998, Abigaba 1998, Mc lure, 1998) or

service provision may be left to market forces which may not

be afforded by low income earners in the district (Abayade

1981) Thus this has instigated this research to find out how

local revenue collection is affecting service delivery in

local government.

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1.3 Purpose of the study

The main purpose was to examine the role of local revenue

collection and service delivery in lower local government in

Kaberebere Town Council- Isingro District.

1.4 Objectives of the study

i. To find out the methods of revenue collection in Kaberebere

Town Council.

ii. To find out how revenue collected has helped in service

delivery in local governments

iii. To find out the challenges faced in revenue collection in

Kaberebere Town Council.

iv. To document possible solutions to the challenges faced in

revenue collection in Kaberebere Town Council Isingro

District.

1.5 Research questions

i. What are the methods of revenue collection in Kaberebere

Town Council?

ii. How has revenue collected helped in service delivery in

local governments?

iii. What are the challenges faced in revenue collection in

Kaberebere Town Council?

iv. What are the possible solutions to the challenges faced

in revenue collection in Kaberebere Town Council?

1.6 Scope of the study

1.6.1 Subject scope

The study covered local revenue and service delivery in

Kaberebere Town council; specifically the study found out the

xx

methods of revenue collection in Kaberebere Town Council, to

find out how revenue collected has helped in service delivery

in local governments, to find out the challenges faced in

revenue collection in Kaberebere Town Council and to document

possible solutions to the challenges faced in revenue

collection in Kaberebere Town Council Isingro District.

1.6.2 Time Scope

The research covered data from period between 2010 to 2012.

This enabled the researcher to get detailed information and

cover a wide range of period leading to a good report.

1.6.3 Area scope

The research was carried in Kaberebere Town Council, Isingro

District South Western Uganda. The Kaberebere Town Council

boarders with Mbarara Municipality in the west, Masha Sub

County in the North, Birere Sub County in the East and

Nyakitunda sub county in the South. Kaberebere Town Council

has a population of 29,396 people and of this total, 14,405

are males and 14,991 are females. The area is mainly occupied

by Banyankole, Bakiga and some few Baganda. The languages

spoken are Runyankole, Rukiga and Luganda (Mbarara District

Planning Unit: 2002). The Kaberebere Town Council is

characterized by rocky hills and it lies at an altitude of 129

meters – 152metres above sea level. The average annual

rainfall is 1200mm, temperature ranges between 17 degrees – 30

degrees centigrade. The soils are mainly loam alluvial and

brown in nature. There is also clay soil especially in the

swampy areas and scattered patches of sandy soils are common.

The soils favor the growth of food crops and grass for cattle

grazing (Kaberebere Town Council Planning Unit: 2002).

xxi

1.7 Significance of the study

The study helped the researcher and other academicians who

would have the interest in searching into a related field by

enabling them get related literature.

The study also helped the government in knowing the problems

and challenges faced in revenue collection and service

delivery.

The study helped to establish the causes of fluctuations in

the local revenue collection in Kaberebere Town Council

Isingro District.

The study was beneficial to policy makers of Kaberebere Town

Council and other Local Government in finding a solution to

the problems of fluctuations in the local revenue collections

and appraises their performance.

The research was beneficial to other academicians as they used

it for literature review while carrying out research in the

similar area.

The study was of use to other stakeholders for example Donors

and the Central government to analyze linkages between local

revenue collection administration and performance.

xxii

The research helped the Local Government authorities to carry

out accountability and to be accountable to the various major

stakeholders. For example, it helped to check on the

misappropriation of the public funds. The research was

significant, as it helped to improve on the management

policies of the Local council authorities. It checked on

bottlenecks and administrative inefficiency.

It was an awakening to the authorities, as it exposed some of

their inefficiencies such as tax avoidance. It urged them to

eliminate those inefficiencies so that they effectively manage

the Local council affairs.

It was significant to Local Government administrators as they

were able to recognize the strong correlation between revenue

collection and service delivery in Local Governments. The

study enabled Local Government administrators to use the

revenue collected to deliver services to the community. They

ensured that the generated revenue is effectively used to

deliver services to the community.

The study was also useful to academicians and researchers in

revenue collection and service delivery management as the

research enabled to examine the effect of revenue collection

on service delivery in Local Governments.

xxiii

CHAPTER TWO

LITERATURE REVIEW

2.0 Introduction

This chapter covers a written discussion of related literature

search. It is as per the study and reflects the objectives of

the research with regards to the role of local revenue on

service delivery in Kaberebere Town Council. While reviewing,

the research mainly focused on the important study variables

which are: local revenue and service delivery.

2.1 Methods of revenue collection

According to the Local Government Finance Commission Act of

2004, local revenue is important to local governments for a

number of reasons like promoting the autonomy of local

governments, maintaining and sustaining investment and

savings, meeting the co-funding and borrowing obligations,

financial council operations and funding other locally

prioritized services and projects. (Surrey, 1974) contends

that the basic collection administrative procedures include

identifying and locating tax payers, checking on tax payers’

compliance and collection of taxes. (Vehorn, C, Ahmad E, 1997)

also shares on this on this view while commenting on sub-

national administration generally and (Silivan C, Albert,H,

1992) concluded that revenue collection will result

specifically from taxpayer registration, training data

processing, tax payers relations and simplification forms.

The implementation of the private revenue collection approach

was among the fiscal reforms intended to improve the

performance of local governments. In the preamble to his work,

xxiv

Smoke (1993) observed that local government social reform

emerged clearly as a major development issue in the 1990s. As

governments of developing countries cut back their budget

growth in response to economic reality and donor pressure,

many are attempting to tap the under-utilized potentials of

the private sector and local authorities to help meet the

rising service demand. This remark pointed out the major

reasons behind the adoption of privatization and these, among

others, included the donor pressure and the increasing demand

for effective and efficient services delivery. However, the

authors work was based on a case study of the local finance

system in Kenya and not particularly in Uganda. Though it is

imperative to note that both Uganda and Kenya were developing

countries, their service provision strategies and efforts were

expected to differ in one way or the other. Furthermore, the

author had generalized all local governments whereas this

study may be unique due to country differences, creating a

need to find out what really transpired at the division level.

According to Bahiigwa et al (2006), the adoption of fiscal

decentralization in Uganda saw many local governments involved

in the collection of taxes using public servants. However,

they further observed that due to the increasing appetite for

tax base expansions and outsourcing of tax collection, private

tax collection or tax farming was adopted as an innovation.

This private tax collection or tax farming is what Stella

(1993) defines as a system wherein, the right to collect

certain taxes owned by the state is auctioned off to the

highest bidder.

As one of the strategies to increase local government revenue,

Uganda adopted the use of private firms for this purpose. This

xxv

was one of the popular strategies to remedy problems of

revenue mismanagement in local governments. The end result

would be to improve revenue collection efficiency,

effectiveness and accountability. Fjeldstad and Tungodden

(2003) support this argument saying that privatization of

government services was rapidly becoming a key feature in the

management of revenues in developing countries. They observed

that the present enthusiasm for private tax collection among

bureaucrats, and other participants in the policy debate on

local government finances was echoed as increasing efficiency

and effectiveness.

In Uganda local revenue collection has been facing a declining

trend over the years which need attention to focus on the

underlying causes of this declining trend. Local government

revenue sources have faced a drastic decline and therefore

have to depend on the central government funding which

accounts for 95-98% of their budgets. Transfers to local

governments as a percentage of public expenditure has fallen

from around 47% in 2001/2002 to about 22% in 2008/2009. Thus

meaning more resources are being retained at the centre

(Kadiresan, 2009). In this view, a number of studies have been

conducted to reverse this trend among which is the inventory

of best practices by local authorities inspection department

(Ministry of Local Government, 2004) and other factors given

for this trend include; over reliance on graduated tax,

ignorance and existence of obsolete tax laws like Property Tax

(Rating decree) 1997, Town and County Planning 1964, Public

Health Act 1969, Liquor Licensing Act 1967, Markets Act 1942

and others.

xxvi

In local government, revenue collection can be improved

through sensitization of tax payers (Lubega, 2000) as means of

shaping their attitudes and ensure compliance to tax payers.

Regulations 28 and 34 of the Local Government Financial and

Accounting regulations 1998 highlights duties of revenue

collector, guides revenue collectors on accountability of

revenue collected.

In some instances where low revenues are collected, so as to

enable delivery of services, it is attributed to uneven tax

administration, (Silivan C, Albert H, 1992). Local revenue

collection has to comply with certain general principles of

raising revenue and how these principles should be fair,

convenient and certain. The collection and administration of

revenue must be economical to the collectors and

administrators (Katarikawe, 1996)

However, Stella, 1993 is against decentralization that if

local authorities are left to make decisions for themselves,

govern themselves, they will be less competent and more

corrupt , abuse their powers and be unable to collect revenues

due to public pressure since few modern sates have granted

private collection a permanent stature in their revenue

generating process. (Miksell,1986) observes that the resources

used in revenue collection provide limited or net service and

that is why (Musgrave, 1969) stressed that in pursuit of

fiscal policy and achievement of optimum tax revenue levels,

minimum administration costs have to be incurred in the tax

revenue collection process.

xxvii

2.2 How revenue collected has helped in service delivery in

local governments

Uganda’s decentralization policy provided for the transfer of

powers and functions from the central government ministries

and departments to local governments. This mandate is embedded

in the 1995 constitution of the republic of Uganda. The

provision of basic services such as water and sanitation,

healthcare, primary education, feeder roads and agriculture

extension services is left to the local governments. However,

the recent policy changes in fiscal decentralization have

brought questions about the capacity of local governments to

effectively deliver services and ensure value for money in

public expenditure. Some government policies which have had

alarming impacts include the creation of new districts and the

abolition of graduated tax. The creation of new districts has

put more expenditure pressures on the local governments,

reducing and in some cases taking away completely resources

that would have been used in increasing and improving service

delivery (Kadiresan, 2009). This therefore calls for placing

“a high priority on delivery of personalized efficient

customer services” (Mourney 1991). Attitudes exhibited by

service providers, employees and managers must be aimed at

developing good working relations and ensuring that customers

are handled well while being served, (Musgrave, 1991), Defined

public sector as “those industries and services in a country

that are owned and run by the state, such as “the education

and railways (in many countries) in comparison with private

sector. Thus delivery entails public sector delivery mechanism

to the local residents of the local government.

xxviii

(Nangobi, 1987) defined service delivery as an “attitude or

dispositional sense, referring to the internalization of even

service values and norms” (Nangobi, 2000) said that service

delivery is concerned with supplying “superior products” based

on the opinion of the customer. Whereas (Kitimbo 1995) asserts

that service delivery should be designed in such a way to

provide maximum levels of location and time (Cousell, 1994)

confirms it by saying that location of service delivery and

their accessibility contribute to customer needs and

preferences satisfaction.

According to the National Service Delivery Survey (NSDS) 2000,

it was noted that, effectiveness of service delivery in local

governments can be gauged by the expenditure amounts allocated

to various service items in regard to the National Programmes

Priority Areas (NPPA). This report included some other

attributes like the perception of perception of service

delivery and level of achievement of value for money by the

locals, to determine the level of achievement of local

governments in attaining reasonable levels of service delivery

to its residents/taxpayers.

In contrast, (Fitz W Bingling, 1997) requires that service

delivery should take into consideration the completion rate

and recovery rate by service providers and (Minnesota, 2008)

found out that since technocrats undertake service delivery on

behalf of governments, thus there is need for “a bottom-up

“prioritizing to have effective spending public funds.

If prioritizing is not taken into consideration, only those

governments that take the decision to provide an effective

service delivery, architecture will be able to cost

xxix

effectively meet citizens continually rising expectations of

government services (Stevens James, 2005). (Weng Yeu Lai,

2005,) argues that since service delivery remains agency-

centered such that government forced citizens to interact with

them the way they are organized instead of the way that best

makes sense from citizens’ perspective, some of the services

provided remain unattended to.

According to the Uganda Particulars Assessment process Wakiso

District report (2001), it was indicated that people are

unhappy with the service provision. The locals are much

concerned about the quality of the services yet most of the

poor are scared of inaccessible services, the quality of

health service delivery for example are mentioned to the poor

and consultants attribute the poor service delivery to

mismanagement of public funds, lack of transparency,

accountability and consultation from the poor people who never

get to know of the services provided and participate little or

not in planning for their funds.

Thus from that above discussion, there is need for local

governments to provide enough information concerning service

delivery to the residents. In a budget, service delivery can

be strengthened through a number of ways; improved service

delivery and Strengthened governance and accountability.

However, (Zola, 1997) notes that despite the governments’

determination and commitment, some of their expectations will

take long time to be realized because we have to live in the

resources that our country can afford. Tax evasion and

avoidance is also explained by (Snavely, 1998) that compliance

for locals to pay taxes to finance service delivery requires

xxx

sending messages in the media tracing the benefits of

compliance.

According to (Abigaba, 1996) the decentralization of local

authorities had a loophole in the revenue collection and

efficiency of service delivery. This was due to the fact that

laws were not clear at times at who should collect revenues

and to whom to offer the services, the poor accounting system,

untrained personnel and politicians all affected the

performance of local authorities. This is in agreement with

(Babiiha, 2002) who noted that the sub-counties in Mbarara

district give water programmes a less priority thus giving

minimal funding hindering construction of new and

rehabilitation of old safe and communal water sources.

The Local Government Finance Commission has focused on three

areas of improvement in order to enhance local revenues. These

are; improving co-ordination amongst central institutions;

facilitating policy debate to inform the LGFC and MoLG on

policy and legal improvements; and enhancing the capacities of

local governments to raise more local revenues by encouraging

them to implement best practices.

To facilitate the implementation of these revenue enhancement

objectives, the LGFC established a Local Revenue Enhancement

Co-ordinating Committee (LRECC) in April 2002. The main tasks

of the LRECC are to co-ordinate and support the development of

conducive decisions and policies regarding local revenue and

to enhance the capacities of local governments to effectively

and efficiently generate and manage sustainable local

revenues.

xxxi

There is a general agreement amongst decentralization authors

that a viable local revenue base is central to the development

and sustenance of a strong decentralized local governments

system. Local revenue, among other things, promotes ownership

and autonomy of the local governments (Local Government

Finance Commission of Uganda, 2003). Unless local governments

have some significant freedom to alter the level and

composition of their revenue, neither local autonomy nor local

accountability which is central to decentralization is

meaningful. Furthermore, local revenue payment is vitally

important for the citizens to reinforce accountability for

service delivery by locally elected politicians and appointed

civil

In Uganda, the tax system has been one of the victims of

numerous economic crises that have plagued the country since

1966. Tax collections are still very low leading to large

fiscal deficits. The country has also suffered from over-

dependence on a small number of sources of tax revenue, which

are vulnerable to external shocks and remain a crucial problem

in the tax system. Since May 1987, Uganda’s tax system has

undergone fundamental reform in response to the need for funds

to support economic and social development. The government

intensified efforts in the area of tax administration and

expenditure cutting to attain fiscal discipline.

If local governments do not have a significant degree of

freedom to set the level and composition of their revenues,

neither local autonomy nor local accountability are

meaningful. In particular, local government must be able to

set tax rates (albeit within limits). Few local governments in

xxxii

developing or transitional Common wealth countries have this

ability at the moment. Local government should not only have

access to those revenue sources that they are best equipped to

exploit - such as residential property taxes and user charges

for local services - but they should be both encouraged and

permitted to exploit other sources.

The development of responsible and responsive local government

is thus dependent on local government having at least some

degree of freedom with respect to local revenues, including

the freedom to make mistakes and be held accountable for them.

This means that local government must have control over the

rates of some significant revenue source if they are to be

fiscally responsible and able to innovate as to the way they

finance basic services.

2.3 The challenges faced in revenue collection

Similarly, Kiser (1994) observes that there is a dilemma in

monitoring the process of private revenue collection. This is

attributed to the limited resources and skills needed in the

process of revenue collection. This creates a challenge where

the unskilled private revenue assistants fail to make proper

estimates on the revenues and revenue potentials of some

revenue sources. The scholar further notes that the

uncertainty about the size of the tax base represents a key

aspect of this monitoring problem. Stable revenue bases reduce

the difficulty of the monitoring problem and enable the

drawing of more accurately predictable revenue flows. Indeed

as observed by the author, it is worthy appreciating

xxxiii

especially in relation to the challenges related to poor

technical skills in revenue collection firms.

Just like in any other policies being introduced, the

introduction of the private revenue collection scheme is

expected to face several challenges. According to Toma, (1993)

private revenue collection illustrates two core challenges

namely corruption at collection point and the scope for

ascertaining the tax base of activity-sensitive taxes. He

observes that corruption is usually based at the top hierarchy

of the local government officials. This claim is relevant in

explaining the fact that inefficiency and ineffectiveness of

private revenue collection.

Additionally, Svensson (2003) looks at revenue collection as

associated with the challenge of monitoring especially with

the intention of curbing all the associated inefficiencies.

Svensson (2003) further observed that vulnerability to

corruption and tax evasion were common features of all tax

systems in developing countries and this intensified the

burden for monitoring. The empirical foci being on problems of

accountability and leakages within private agencies, and the

massive inefficiencies uncovered in the administration duties.

Kiser (1994), noted that the primary obstacles of revenue

collection were that, information sources are scattered and in

some cases non-traditional revenue rarely accounted for.

Furthermore, local government officials tended to understate

the scale of non-conventional local revenue. At the same time,

some forms of non-traditional revenue (contributions by

associations and local figures) are less frequent in rural

areas.

xxxiv

With respect to privatisation of markets, there are examples

of political manipulation in relation to award of tenders

which have undermined potential of this innovation and

negatively affected people‘s willingness to pay (Devas and

Etoori 2004). The willingness

to pay is not independent of the way taxes are collected. The

coercive element of the taxpayer-tax collector relationship

assumes that taxpayers ‘behaviour is influenced by factors

such as the tax rate determining the benefits of evasion, and

the probability of detection and penalties for fraud which

determine the costs. The problem is thus one of rational

decision making under uncertainty whereby tax evasion either

pays off in lower taxes or subjects one to sanctions Dealing

with the policy problem of revenue enhancement and tax evasion

requires some understanding of the factors underlying the

individual‘s decision whether to pay or not to pay taxes

(Fjeldstad, 2004).

For the public to hold the government accountable, and for it

to appreciate the positive side of local taxes, it requires

that the electorate is informed about the way local revenues

are being used and how they actually contribute to the

delivery of local services. Unwillingness to pay is the result

of a combination of political protest to the degradation of

public services, perceptions of unfairness of the charges

which do not take ability to pay into consideration as well as

corruption and other administrative failings by the local

governments (Tripp, 1997).

xxxv

Revenue collection and management. (Cheasty, A, 1996) gave

the factors for the decline of revenue collection as politics,

declining tax bases that are a sharper decline in taxed

activities, retailers failing to pay taxes because of minority

policies, unemployment and deficiencies in governance that is

tax administrator service delivery in the local government

finds it difficult to deal with criminal elements

(Yankelovick, 1984) stated that sizeable share of the

population regard the tax laws as unfair. Empirical studies on

tax compliance are handicapped by data scarcity. Revenue

authorities do not reveal their audit strategy and official

respect for tax payers’ privacy further limits a researcher’s

access to data.

Tax administration, A survey by (Satich C Wadhawan and Clive

Gray, 2001) reveals that uneven tax administration in Africa

is a major contribution to revenue shortfalls that augment

inflationary pressure while depriving governments’ resources

with which to provide public goods. Uneven tax administration

also stimulates resort to more easily collected taxes on

foreign trade with associated efficiency losses (Wadhawan and

Gray, 2001) noted that theoretical and empirical research on

why persons subject to tax comply or fail to comply with their

legal liabilities has been pursued by social scientists from

various disciplines. The direct benefit of successful tax

evasion is obvious, it is the value of the payments evaded,

comprising their resources thereby saved. Drowning from

reference group theory (Grasmick and Scott, 1982, Thurman,

1986, Dickens, 1986) attribute tax evasion to a norm

neutralization process that is tax evaders justifying their

cheating by the belief that everyone else does the same thing

xxxvi

and or the benefit they receive from government fall below

their share of the tax burden.

In Uganda local revenue collection has been facing a declining

trend over the years which need attention to focus on the

underlying causes of this declining trend. Local government

revenue sources have faced a drastic decline and therefore

have to depend on the central government funding which

accounts for 95-98% of their budgets. Transfers to local

governments as a percentage of public expenditure has fallen

from around 47% in 2001/2002 to about 22% in 2008/2009. Thus

meaning more resources are being retained at the centre

(Kadiresan, 2009). In this view, a number of studies have been

conducted to reverse this trend among which is the inventory

of best practices by local authorities inspection department

(Ministry of Local Government, 2004) and other factors given

for this trend include; over reliance on graduated tax,

ignorance and existence of obsolete tax laws like Property Tax

(Rating decree) 1997, Town and County Planning 1964, Public

Health Act 1969, Liquor Licensing Act 1967, Markets Act 1942

and others.

In local government, revenue collection can be improved

through sensitization of tax payers (Lubega, 2000) as means of

shaping their attitudes and ensure compliance to tax payers.

Regulations 28 and 34 of the Local Government Financial and

Accounting regulations 1998 highlights duties of revenue

collector, guides revenue collectors on accountability of

revenue collected. In some instances where low revenues are

collected, so as to enable delivery of services, it is

attributed to uneven tax administration, (Silivan C, Albert H,

1992).

xxxvii

Local revenue collection has to comply with certain general

principles of raising revenue and how these principles should

be fair, convenient and certain. The collection and

administration of revenue must be economical to the collectors

and administrators (Katarikawe, 1996)

However, Stella, 1993 is against decentralization that if

local authorities are left to make decisions for themselves,

govern themselves, they will be less competent and more

corrupt , abuse their powers and be unable to collect revenues

due to public pressure since few modern sates have granted

private collection a permanent stature in their revenue

generating process.

(Miksell,1986) observes that the resources used in revenue

collection provide limited or net service and that is why

(Musgrave, 1969) stressed that in pursuit of fiscal policy and

achievement of optimum tax revenue levels, minimum

administration costs have to be incurred in the tax revenue

collection process.

(Mukasa, 200) explains that instances where tax administration

is lacking, tax payers are less sensitised about the benefits

of paying taxes. During their pilot study carried out in

Tororo District, (Bitarabeho, 2003)noted that factors

hampering revenue potentials included, law and outdated

reserve prices for tendered utilities, absence and or marginal

monitoring and supervision of privatized utilities by local

governments, viability of utilities and volume of business

transactions, some revenue collectors print their own

receipts/tickets, mushrooming of unofficial taxi parks and

markets operating outside gazetted areas, exorbitant/high

xxxviii

rents, lack of systematic process to guide determination of

reserve prices, distortion in local revenue collection due to

political interferences and or patronage and over reliance on

chief finance officers and sub-county chiefs to advise on

reserve price of utilities.

According to Wadhawan and Gray, 2001There are inadequate

capacity and technical skills to manage Local revenue

collection in Local Governments. The problem is compounded by

the fact that many workers within the Local Government lack

the necessary academic qualifications. There are inadequate

capacity and technical skills to manage Local revenue

collection in Local Governments. The problem is compounded by

the fact that many workers within the Local Government lack

the necessary academic qualifications. For example, a greater

percentage of the labor force engaged in revenue collection

cannot differentiate between direct and indirect taxes let

alone knowing the implications of these various types of

taxes.

According to Svensson (2003) said that , the tendering

function has attracted many criticisms on their lack of

transparency, compromising the amount of revenue collection

and there is lack of professionalism, which manifests itself

in corruption tendencies in the award of tenders. To make it

worse, the line that separates the tender board from the

political structures in the District is a thin thread, hence

leading to a vicious circle of corruption and inefficiency.

xxxix

Political interferences. A survey carried out by the Uganda

Local Government association (ULGA) released, indicated that

politicians are “continuously and unlawfully awarding

themselves tenders”. The Local Government ministry and the

development network of indigenous people organization (DEVIVA)

also support the study. It alleged that politicians pressure

and influence the procurement committees to award tenders. The

association noted that this led to shoddy work and substandard

services because the companies are hard to supervise.

The Uganda national health users and consumers’ organization

(UNHCO), that conducted the study pointed out that the

procurement process was the most abused by politicians and it

remained obscure for them on how to win tenders. Robinah

Kaitirimba, the UNHCO national coordinator, said that the

four-month survey conducted in Nebbi, Masaka, Nakapiripirit

and Kasese focused on health care, education, water and

opportunities for Local economic development.

Abel Ojeo, a consultant for UNHCO, said that most politicians

would not admit that they were awarding themselves tenders. He

stressed that finding on the ground indicate that politicians

had crippled service delivery as civil servants fear to

supervise their companies for fear of victimization. “The

politicians have taken over the purchase of NAADS inputs and

they end up procuring low quality materials to make a big

difference,” Ojeo added.

xl

The vice president of ULGA Richard Andama said Local

Governments receive 30% of the national budget, which is small

compared to the work they are expected to deliver. Andama who

is also the L.C. 5 Chairperson of Arua District said that the

survey would help them to know the Local Government gaps.

(Adapted from the New Vision. The New Vision, Monday July 5

2010. Report pins politicians over tender boards)

It should be noted that even at the Local Government, level

there is a lot of interference by the political leaders, which

hinders the desired objective of increasing revenue collection

in local governments. For example, many tax evaders/defaulters

have always been shielded by the political ‘heavy weights’

within the District Local Government.

Inappropriate laws governing property rates and trading licenses. Some of

the laws governing property rates and trading licenses are not

appropriate in Local Governments. Some of these laws will be

appropriate in big commercial centres where the tax base

regarding property and trading licenses is high unlike the

rural based Local Governments, hence low revenue collection.

Inadequate record keeping by the authorities. This greatly affects

accountability as far as revenue collection, is concerned.

Although some records are essential in tax administration in

Local Governments, they do not always achieve the desired goal

because they are always abused/ misused by the revenue

authorities. (Fjeldstad and Tungodden ,2003)

xli

The weak tax-benefit linkages. This has greatly led to poor revenue

collection as the masses fail to realize the purpose of paying

tax yet they do not directly benefit from the fruits of

taxation. In some instances, the poor tax-benefit linkage has

resulted into violent strikes especially towards the tax

administrators who are regarded as daytime robbers.

A challenge of tax assessment collection and administration. It is worth

noting that the tax assessment collection and administration

is a very big challenge. For example, the apportioning of the

tax burden to the potential taxpayers is unfair. In most

cases, the process of tax assessment lacks both horizontal

equity as well as vertical equity. Unfair taxes are imposed on

the people and this is partly due to the undefined sources of

income as well ignorance about the true nature of a tax system

by the tax authorities hence leading to poor revenue

collections.( Fjeldstad and Tungodden ,2003)

Poverty among the taxpayers. Most of the potential taxpayers in

Mbarara District Local Government are poor, as some live below

the poverty line. This means that the tax authorities are left

with a small number of individuals who taxable and who have

the tax capacity. Tax capacity is the ability of a taxpayer to

pay a tax assessed on him and remain with enough disposable

income. Hence, the low taxable capacity affects revenue

collection and hinders effective service delivery. (Satich C

Wadhawan and Clive Gray, 2001).

xlii

Poor motivation to tax authorities. The tax collectors are not well

motivated in terms of material and financial incentives and

yet lack the moral support from the top District authorities.

For example, they collect a lot of revenue in comparison to

what they earn as salaries or wages yet the exercise involves

high risks like violence in form of tax riots, harassments, as

well as assault from the potential taxpayers. The poor

motivation has caused complacency, neglect, and more so

bribery and corruption among the tax collectors. (Satich C

Wadhawan and Clive Gray, 2001)

2.4 Solutions to the challenges faced in revenue collection

Although Uganda’s revenue performance has improved remarkably

in nominal terms from 1986 to 2006 as a result of these

changes, it is still comparatively low and clearly does not

meet Uganda’s needs as measured against optimal levels of

public expenditure for the country. It is therefore accurate

to conclude that the government must improve its tax policy to

increase government revenues, but in a way that takes the

realities of Uganda’s social and economic structures into

consideration. The challenge of inefficient domestic revenue

mobilization carries important policy implications for Uganda

(among which are included bad public services and increased

debt), because domestic revenue production has not improved

significantly despite the many changes the government has

made.

Substantial powers, functions, and responsibilities are

devolved to local governments by the LGA. Local governments

have the power to make and implement development plans based

xliii

on locally determined priorities. They have the power to make,

approve and execute their own budgets; to raise and utilize

resources according to individual priorities after making

legally mandated disbursements. Similarly, local governments

can make ordinances and by laws which are consistent with the

constitution and other existing laws, ordinances and by laws.

In addition, local governments are mandated to hire, manage,

and fire personnel. They manage their own payroll and separate

personnel systems.

The introduction of neo-liberal reforms under structural

adjustment programmes (SAP) with emphasis on liberalization,

downsizing and changing tax policy as well as tax

administration has brought to the fore the urgent practical

necessity of increasing revenues, which will enable the state

to deliver basic services. In fact, revenue maximization is

the primary objective of tax policy. The informal sector

therefore becomes the obvious avenue to be drawn into the tax

net having been mostly out of it.

Informalization might be indicative of the fact that operators

see no value in engaging with the state in the protection of

life and property, and therefore legitimacy becomes a serious

concern. In order to regain legitimacy, governments are

looking for ways to incorporate informal activities into

formal systems. Taxation is a good route into the problem, as

it enables governments to recognize informal activities

without legitimizing the breaking of other rules and

regulations.

xliv

A classical economist Adam Smith (1776) put forward the canons

or general principles of taxation which he said should be

observed when imposing a tax, and these are; equity,

certainty, convenience, productivity, buoyancy and economy.

These canons if followed in tax assessment, collection and

administration, improve on the Local revenue collection and

administration.

Convenience. Under the principle of convenience, Adam Smith

stated that every tax ought to be levied at the time that it

is most likely to be convenient for the taxpayer to pay. He

further said that, both the time and mode of payment should be

convenient. For instance, farmers should be taxed when they

sell their crops, office workers to be taxed when they receive

their salaries, traders taxed when they make profits.

Canon of Equity. Under the equity principle, Adam Smith Stated

that the amount of tax burden on taxpayers should be equal or

proportional to their incomes such that the higher the income

earners pay more taxes (tax liability) than the low-income

earners. Adam smith’s principle of equity is based on

humanitarian grounds. Equity takes two forms, horizontal

equity, and vertical equity. Horizontal equity means that

people in the same income bracket should be taxed equally

while vertical equity means that people in different income

brackets should be taxed differently.

Productivity. Tax productivity is the ability of a given tax to

generate as more revenue as possible to the Local Government.

Therefore, a tax should be more effective and productive as

possible. The tax system should yield enough revenue to the

xlv

treasury, so that the Local council does not resort to deficit

financing.

Certainty. The canon of certainty has to be put into

consideration in order to improve on the Local revenue. The

taxpayer must be protected from unnecessary harassment by

revenue officials by advocating for the certainty and non-

arbitrariness of the taxes, fees, and charges that each

individual is bound to pay. This is because unpredictable

taxes discourage investment and reduce effort of work.

Economy. Local revenue collection can also be improved by the

principle of economy. The principle stresses that the cost of

collecting and administering taxes, fees and charges must be

much lower than the tax proceeds. The collection costs should

not exceed 5% of the tax. It is meaningless to impose taxes,

which are widespread and difficult to administer as they

impose an unnecessary burden upon the society in the form of

additional administrative expenses.

Flexibility/ Buoyancy. The tax should change directly with the

change in tax base. A tax should be able to change directly

with the changes in the economic situations or incomes or tax

bases with the Local administration, for instance if the

taxpayers’ incomes rise, even the taxes on them should be able

to adjust directly and taxes should reduce as incomes reduce.

The fees/tax structure should be adjustable to the changing

requirements of the Local Governments with ease; and the Local

revenue system should not be complicated.

xlvi

Diversity. It is risky for the Local Government to depend upon

very few sources of Local revenue such as a system is bound to

breed a lot of uncertainty for the treasury. If Local revenues

come from diversified sources, then any reduction in a

particular revenue item is bound to be very small, hence the

principle of diversity. However too much multiplicity of taxes

should be avoided as it may lead to unnecessary cost of

collection and hence violate the economy principle.

Fiscal authorities should be in position to predict and

accurately forecast the revenue a particular tax will generate

and at what rate it will flow in, for this is because

inelastic tax is usually unproductive.

However, the various canons of taxation as put forward by Adam

smith such as equity, convenience, flexibility, certainty, may

not fully help in tax assessment, collection, and

administration because of the nature or make up of the Local

Governments. For example, it is difficult to estimate the

convenient period of paying taxes by some people who are in

informal sectors. With equity, it might be quite difficult to

determine people who are in the same income brackets because

of the tendency of the tax people to be very secretive when it

comes to disclosing their wealth.

Indeed Adam smith’s principle of diversity may not be

appropriate in less developed economies where by the tax base

is low with agriculture as the main economic activity. It can

be asserted that Adam smith’s principles of taxable can be

more appropriate in developed countries with a variety of tax

bases and with a well-developed database about individuals and

their incomes

xlvii

2.5 Conclusion

Thus there is need to carry out the study with an attention of

tracing the loopholes in revenue collections in relation to

service delivery in the local government especially in

Kaberebere Town Council In Isingro District. So the local

people should be satisfied on the importance of paying taxes

so that it becomes easy to collect the revenues from them

without resistance. It has also helped the researcher to

define terms like local revenue, service delivery, revenue

collection which all surface in literature review. For

instance according to the (Local Government Act, 1997) it

defines local revenues as the subtotal of all categories

collected from a number of sources like market dues, fines and

penalties and parking fees. Service delivery is defined as the

process of extending basic services like education,

healthcare, water, transport and communication where the end

users are the public or local people within the country (Ray

Tomkinson, 2007 pg 211). Tax administration refers to the

process of administering taxes like identifying the tax

payers, assessing them and then levying reasonable taxes they

are capable of paying.

xlviii

CHAPTER THREE

RESEARCH METHODOLOGY

3.0 Introduction

This chapter comprised of research design, study population

sampling frame, sampling design and selection, methods of data

handling, data analysis, reliability and validity, ethical

consideration and limitations of the study.

3.1 Research Design

The research study used an explanatory type of research where

the major aim was to establish the relationship between local

revenue and service delivery. Both quantitative and

qualitative research design was used to obtain information.

Also the researcher employed descriptive research design to

describe the phenomenon as it exists, comparative research

design to compare local revenue collection and service

delivery in Kaberebere Town Council in Isingro District, cross

sectional research design to get the causal effect and the

relationship between local revenue collection and service

delivery in Kaberebere Town Council in Isingro District..

xlix

3.2 Study Area

The study was carried out in Kaberebere Town Council in

Isingro District in Mbarara district. This was because

Kaberebere Town Council has local revenue collections and

service delivery council that was able to provide the

necessary information to the researcher with ease. And is also

the nearest Division which helped the researcher to reach

there in time and collect the necessary information required.

3.3 Study variables

The variables under study used local revenue as an independent

variable and service delivery as a dependent variable.

3.4 Study population

According to the Uganda bureau of statistics 2011 estimates.

Kaberebere Town Council had a population of 24,492 people. The

study will include people from various households, staff from

Kaberebere Town Council offices (the division authorities) and

business community like traders and vendors from different

markets in Kaberebere Town Council.

The population that was surveyed to achieve the research

objectives included Kaberebere Town Council revenue officer,

senior finance secretary, and secretary for finance sub-

country chiefs, members of the tender board, sub accountants

and tax payers in the area.

3.4 Sampling Design

3.4.1 Sample size

This study considered 50 respondents to participate in the

study and they represented the entire Kaberebere Town Council

l

population of 24,492. And below is a table showing the sample

size, a sample of 50 respondents was identified to fill the

questionnaires. These were comprised of Kaberebere Town

Council, Sub–countries and Kaberebere Town Council

headquarters as the services delivery provider. The local

governments were selected using proportionate stratified

sampling and simple random sampling, whilst Kaberebere Town

Council was purposively selected.

Table 1: Showing sample size

Category of respondents FrequencyRevenue officer 02Senior finance secretary 02Secretary for finance 02Members of tender board 10Sub-country chiefs 09Sub-accountants 5Tax payers 20Total 50Source: Primary Data 2014

3.4.2 Sampling Selection

Purposive sampling procedure was used among Staff from

Kaberebere Town Council because they had facts on the

relationship between local revenue and service delivery in

Kaberebere Town Council which was relevant to the study. For

households and tax payers, stratified random sampling was used

where by the Division (Kaberebere Town Council) was divided

into strata basing on divisions, a simple random sample was

got from these strata, this was done in order to avoid

concentration in one part of the Division.

li

3.5 Instruments of Data Collection

3.5.1 Data Sources

These included both primary and secondary data sources.

Primary data: Primary data refers to data observed or

collected from first hand experience original data collected

at the source and compiled for the purposes of this research

study. This was collected from the self administered

questionnaires.

Secondary data: This is data that was extracted from existing

literature for example internal accounting reports, monthly

financial reports, annual reports, audited reports,

District/sub country final accounts manuals, annual budget

proposal and the background to the budget.

3.5.2 Questionnaires

This instrument was used to collect primary data. The

researcher did this using self administered questionnaires

that were both open and close ended for those who knew how to

read and write. The researcher designed questions which

respondents answered in writing. Data was easy and quick at

collecting as respondents answered the questions in their own

time. This instrument was good as some respondents preferred

to offer information in their own time.

3.6.2 Interview Guides

The researcher used interview guides and informal interview to

solicit responses from respondents. These provided confidence

to the respondents and opened up more information, through the

interview method, observation method was also applied in

lii

recording verbal answers to various thus allowing flexibility

as supported by Kothari.C.R (2004)

3.6.3 Documentary review

Secondary data was collected from different sources including;

library books, Internet, newspapers, journals, and magazines

among others.

3.6.4 Survey method: This is where data was collected from the

entire population or large sample. This method was used due to

its wider coverage and in addition it permitted the comparison

and generalization of findings in a cross section of the study

area.

3.6.5 Interviews: Face to face in depth interviews were

conducted to collect data from Kaberebere Town Council

officials and other respondents. This involved designing

schedules on which respondents met in the local government in

Kakoba Division. This helped to close down the gap left by the

survey method.

3.7 Methods of data handling

3.7.1 Data processing

Data was processed manually and scientifically. Tallies were

made for each question, sorting cards where data was recorded

using computer packages such as Microsoft excel and word were

used by the researcher in processing collected data.

3.7.2 Editing

Raw data was examined to detect errors such as ticking what is

not correct or omissions and to correct where possible, after

liii

the field and in case of uncompleted questionnaires, the

respondents were contacted for clarification. Editing

involved, a careful scrutiny of the completed questionnaires

to ensure that data was accurate, consistent with other facts

gathered, uniformly entered and completed as possible and was

arranged to facilitate coding tabulation.

3.7.3 Coding

Data was classified using numerals and symbols that were

assigned to answers so that responses were put into a limited

number of categories.

3.7.4 Tabulation

Collected data was presented in form of tables such as

frequency tables, graphs such as histograms, diagrams such as

bars and pie charts.

3.7.5 Reliability and validity

The researcher established the validity of the research

instruments by repeated reviews and expert judgment method

suggested by Gay (1996). The questionnaires were pre-tested in

the field on a group similar to the one the researcher used to

examine whether the questions are fine in relation to the

variables and the objectives of the study.

The following formula was used to test the Content Validity

Index. (C.V.I)

C.V.I = n/N

Where: C.V.I = content

validity of instruments

n = number of

items regarded relevant

liv

N = total number

of items in the questionnaire

3.8 Data analysis

Both qualitative and quantitative data analyses were used.

Qualitative data was analyzed (verbatim reporting) while

quantitative was analyzed by using computer programmes like

Microsoft excel that is under qualitative analysis, thematic

analysis was used and in quantitative data analysis; graphs,

tables and pie charts were used for data analysis and

presentation.

3.9 Research Procedure

This procedure involved different stages before and during the

study. To this, a letter of introduction was got from Dean

Faculty of business and development studies Bishop Stuart

University seeking permission to conduct the study after being

directed by the supervisor to do so. This letter was presented

to respondents in the study area for permission to conduct the

study. Once the permission was granted, the researcher

distributed the questionnaires to the respondents in addition

to interviewing them and the next stage after was analyzing

the data collected from the study respondents.

3.10 Limitations of the study

Some respondents were not willing to provide information as

they would demand incentives like money before they can

provide information. However the researcher tried to explain

and convince them that the study is for academic purposes such

that they would provide the required information.

lv

Biased respondents. This was solved by using probes to alight

respondents more about the problem under study.

The researcher was faced with the problem of inadequate funds

as there was need to move from one place to another and this

to some extent limited the collection of data.

Also the researcher was faced with the problem of fatigue as

the research study involved moving from place to place looking

for the respondents for example the sub-county chiefs.

The researcher faced another limitation of some of the

respondents giving information unwillingly and there is a

belief that some of them could have given wrong information

which wasn’t a match with the purpose of the research.

CHAPTER FOUR

PRESENTATION, ANALYSIS AND INTERPRETATION OF RESEARCH FINDINGS

4.0 Introduction

This chapter analyses, presents and discusses the data

collected during the study. The different departments in

Kaberebere Town Council, Isingro District were studied

according to their respective wards. The chapter involves

presentation, analysis and interpretation of the study

results. The data is discussed under themes concerning socio-

demographic characteristics of the study subjects, the role of

local revenue and service delivery in Kaberebere Town Council,

Isingro District, services delivered to Kaberebere Town

Council, challenges faced in local revenue, possible solutions

lvi

to the challenges faced in Kaberebere Town Council. This

presentation is facilitated by the use of tables, pie charts,

percentages and the use of main points reached by

generalization of what was found out. The interpretation of

the data intended to enable the researcher make appropriate

conclusions and recommendations for better understanding of

the research problem.

4.1 Social demographic characteristics

Social demographic characteristics like Gender, marital status,

age, education level and the position and occupation held were

very important parameters that can have a bearing on any

phenomenon in any society. It can be an indicator how informed the

society is including having implications on the study. These were

looked at in relation to the role of local revenue in service

delivery in Kaberebere Town Council, Isingro District and are

therefore discussed in this section. The study targeted both male

and female respondents who gave a variety of findings that were

not biased making it gender sensitive.

4.1.1 Gender of the respondents

The number of respondents in the study area by gender was

established. Demographic data on the general respondents

reveal a skewed distribution in respect of gender as the

majority was males with 66% as opposed to the females 34%. The

study findings indicate that males had a bigger share of

participation than females in the study. Although the

proportions of women is more than that of men in terms of

population of the communities, in the world of work there are

generally fewer females compared to males. So the above

lvii

percentages represent a true picture of the gender proportions

in Town Council

Table 2: Gender composition of respondentsGender Staff from Kaberebere

Town

Council, Isingro

District

households Business

Community

Frequency

Male 2 9 22 33Female 3 6 8 17

Total 5 15 30 50Source: Primary data 2014

4.1.2 Marital status of the respondents

The marital status of the respondents was also covered and

analyzed to assess their views in relation to the study variables

local revenue collection and service delivery in Kaberebere Town

Council.

Table 3: Marital status of respondents

Marital

Status

Male Female Frequency Percentage

(%)Single 3 1 4 8Married 24 11 35 70Divorced 5 2 7 14Widowed 1 3 4 8Total 33 17 50 100Source: Primary data 2014

The table 3 above indicates that 8% of the respondents were

single, this was followed by 70% who were married, 14% were

divorced and 8 % respondents was widowed. These findings show that

a big percentage of the respondents sampled were married. These

lviii

were of mature age with experience in the world of work and an

understanding of the role of local revenue in service delivery in

Kaberebere Town Council, Isingro District.

The study further established that majority of the married

respondents were Staff from Kaberebere Town Council. The study

respondents regardless of their status were co-operative and

provided the information that was required by the study which

helped in understanding the study problem that was under research.

The gender distribution of the respondents implied that most of

the people participating in local revenue and service delivery are

stable with families thus are always present at their areas of

operation and this helps them to have knowledge about local

revenue and service delivery in Kaberebere Town Council, Isingro

District.

4.1.3 Age of the respondents

Ages of people in any given setting vary along a continuum, so

the ages of respondents were grouped under four categories.

Table below presents the composition of the respondents in

terms of their ages.

Table 4: Age distribution of respondents

Age category of

respondents

Males Femal

es

Frequency Percentage

(%)Below 20 years 00 00 00 0021-30 yrs 11 5 16 3231-40 yrs 17 9 26 52Above 41 yrs 5 3 8 16Total 33 17 50 100Source: Primary data 2014

lix

The table 4 indicates that the majority of the respondents were in

the range of (31-40) years which made a percentage of 52% out of

50 respondents, in all the categories sampled that is Staff from

Kaberebere Town Council, households and Business Community from

Kaberebere Town Council were mature respondents with data about

issues that concern the world of work and have responsibility in

the division.

The study findings revealed that 32% of the respondents were

between 21-30 years. These respondents were participating in

various activities in the Division; in addition some of them

being in position of Paying tax like trading licenses, market

dues, local hotel tax, and local service tax and parking fees

as a source of local revenue as some of such respondents were

selected from various wards in Kaberebere Town Council.

The study findings revealed that, 16% of the study respondents

comprised of those who were in the age blanket of 41 and above

years. This group of the study respondents was also important

in providing information in relation to the study variables

local revenue and service delivery as they were sought to

have worked in the for long and have enough knowledge on the

way local revenue affects service delivery in Uganda .

Lastly, respondents in the age bracket of below 20 years 0%

were not considered because this group was seen as young and

having limited or no knowledge on local revenue and service

delivery. The age composition of the study respondents was

therefore an important factor in generating valid yet reliable

information in relation to the issues concerning the role of

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local revenue and service delivery in Kaberebere Town Councils

well as Uganda.

4.1.4 Level of education of the respondents

Level of education is a very important parameter that can be

used in determining the availability of information or

knowledge on any phenomenon in any society. It can be an

indicator of how informed society is thus people with

different levels of education were all approached during the

study process.

Table 5: Level of education of the respondents

Educationlevels

Male Female Frequency

Percentage(%)

Primary 0 0 0 0Secondary 3 1 4 8Tertiary 7 2 9 18University 23 14 37 74Total 33 17 50 100Source: Primary data 2014

Table 5 above indicates that most respondents constituting 74%

had attained the university level of education. These

respondents were educated hence were assumed to have knowledge

with regard to local revenue ,service delivery and

accountability of lower local government funds and an

understanding on the role of local revenue in service delivery

in lower local government Kaberebere Town Council, Isingro

District.

The other 18 % of the respondents were educated up to the

tertiary level. These were assumed to have some knowledge of

service delivery, methods of revenue collection, challenges

lxi

faced in local revenue and services delivered to Kaberebere

Town Council, Isingro District. These respondents provided

very vital information that helped the researcher in writing

her report as the study problem at hand was clearly revealed.

Furthermore, 8% of the respondents were educated to secondary

level and further establishment indicated that all these

reported to be taking part in business activities in

Kaberebere Town Council where the study was carried out. The

respondents stressed that proper local revenue collection and

allocation of funds collected, proper accountability of local

government funds are very important for any public entity in

service delivery.

Finally, respondents educated up to primary level were not

used in the study as this group was assumed to have no

knowledge of the role of local revenue collection in service

delivery

4.2.0 Methods of local revenue collection

This section presents results of the research project after

information collected was critically analyzed. The results

have been presented in accordance with the research objectives

that guided the study. Tables and pie charts have been used in

the presentation.

4.2.1 Methods of local revenue collection in Kaberebere Town

Council, Isingro District

Data obtained through the completed questionnaires and the

interview guide indicated that all the respondents agreed that

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there are methods used to collect local revenue. Table 6 below

presents the responses to research objective one.

Table 6: Methods of local revenue collection in Kaberebere Town Council

Are there methods used to

collect local revenue

Mal

e

Femal

e

Frequency Percenta

geYes 33 17 50 100No 0 0 0 0Total 33 17 50 100Source: Primary data 2014

Table 6 above shows that 100% of the respondents accepted that

there are methods used to collect local revenue in Kaberebere

Town Council, Isingro District. This means that there are

methods used in revenue collection which are indicated in the

table 6 below.

Table 7: Methods used to collect local revenue in Kaberebere

Town Council, Isingro District

Methods used to collect

local revenue

Male Femal

e

Frequenc

y

Percentage

Self assessment

collection

13 4 17 34

Private revenue collection

(Tendering)

9 7 16 32

Public servants 5 2 7 14others 6 4 10 20Total 33 17 50 100Source: Primary data 2014

According to the study finding, 34% of the respondents

revealed that local revenue is collected using self assessment

method. Where tax is assessed and tax payers are given

lxiii

receipts that is tax collectors whom they identified as

revenue enforcement officers collect money and bring bank

slips after banking .They also revealed that Kaberebere Town

Council use housing finance bank where they have an account

where all local revenue are deposited that is Local service

tax ,local hotel tax ,market dues ,trading license, property

tax and other local revenues like fines ,tax park

fees ,public toilet collections and street parking collections

.

While 14% of the respondents revealed that local revenue is

collected using public servants who normally go to field and

collect money ,this is also in line with what Bahiigwa et al

(2006), said in chapter two that “ the adoption of fiscal

decentralization in Uganda saw many local governments involved

in the collection of taxes using public servants. However,

they further observed that due to the increasing appetite for

tax base expansions and outsourcing of tax collection, private

tax collection or tax farming was adopted as an innovation.”

And according to the field findings public servants go in

field supervise and do the assessment of local taxes and this

is done according to the size, location, nature of the

business. The rate of tax depends on the location where by

businesses which are located on high street, road pay higher

taxes compared to others.

While 32% of the respondents revealed that local revenue is

collected by using private revenue collection (tendering). The

respondents revealed that this has been achieved through

proper regulations, procedures and standardized bidding

documents. And this is done by allowing private sectors to

participate in revenue collection through tendering where the

tender is taken by the highest bidder .Respondents identified

lxiv

different tenderers in Kaberebere Town Council who has helped

in revenue collection and they collect tax on behalf of local

government (Kaberebere) Which among others include WAJO

Enterprise ltd who is collecting trading license, local hotel

tax, local service tax. Fair way free companies in charge that

is in charge of street parking and property tax and central

market vendors association in charge of market dues.

Lastly 20% of the respondents revealed other methods like

revenue enforcement, fines from within and around the

division, street parking revenue collection

4.3 Contributions of local revenue towards service delivery in

Kaberebere Town Council, Isingro District

This research objective intended to find how revenue collected

has helped in service delivery in Kaberebere Town Council,

Isingro District. Data collected indicated that local revenue

collected has helped in service delivery and table 8 indicates

the responses of the respondents.

Table 8: Has revenue collected helped in service delivery to Kaberebere TownCouncil, Isingro District?

Responses Male Female Frequency Percent

ageYes 33 15 48 96No 0 2 2 4Total 33 17 50 100Source: Primary data 2014

The study findings indicate that 96% of the respondents

agreed that there Services has been delivered to Kaberebere

Town Council, Isingro District while 4% said that there are no

services delivered. And table 9 shows the services delivered

to Kaberebere Town Council.

lxv

Table 9: The services that have been delivered to Kaberebere Town CouncilServices delivered Male Female Frequency Percentage

Garbage collection 3 1 4 8

Town planning 10 7 17 34Road construction & maintenance 8 2 10 20Health centres &medicalfacilities

5 5 10 20

Free education and constructionof schools

3 0 3 6

Security ,law enforcement environmental al protection

4 2 6 12

Total 33 17 50 100Source: Primary Data 2014

According to the study findings in table 9 above, 8% of the

respondents cited the garbage collection as one of the

services delivered to Kaberebere Town Council. In their view,

the respondents contented that the Local revenue has helped

the division to remain smart by daily collection of Garbage.

34% of the study findings also revealed that there has been

town planning which is a technical and political process

concerned with the control of the use of land and design of

the urban environment. Whereby they identified transport

network, to guide and ensure the orderly development of

settlements.

The study also revealed that out of 50 respondents, 20%

revealed that among services delivered, there was road

construction and Maintenance which has helped the division to

ease transport services and enhanced businesses in the Town

Council.

It was also revealed that 20% of respondents indicated that

there was provision of health centres and medical

lxvi

facilities. They quoted some of the health centres put in

place like “Kaberebere health centre, Isingro health centre

and that these health centres has helped them in terms of

medical facilities.

While 6% talked about provision of free education and

construction of schools where by the revenue collected is

distributed among wards and each ward is divided into parts

(LC1) and each LC1 is represented by 10 children to be paid

for by the division. Also the division is having some

schools whereby it provides the necessities like staff

salaries books, cleaners, buildings and other school

requirements.

12% of the respondents cited that there has been provision of

other services which among others included; environmental

protection security facilities, Project funding, supporting

agriculture, law enforcement which broadly refers to any

system by which some members of society act in an organized

manner to promote adherence to the law by discovering and

punishing persons who violate the rules and norms governing

that society.

4.5 Challenges faced in revenue collection in Kaberebere Town

Council, Isingro District

This sought to establish the challenges faced in revenue

collection while implementing and delivering services and the

data is analyzed according to the respondents’ responses from

the data obtained from the collected questionnaires and

interviews.

lxvii

Table 10: The challenges faced in local revenue collection in Kaberebere TownCouncil, Isingro District

Are there challenges faced in revenue collection?

Male Female Frequency Percentage

Yes 27 16 43 86No 6 1 7 14Total 33 17 50 100Source: Primary data, 2014

Table 10 above shows that majority of the respondents 86%

revealed that there are challenges faced in revenue collection

Kaberebere Town Council, Isingro District. This is compared to

the least number of the respondents totaling to 14% who

contended that there are no challenges faced in revenue

collection. These respondents believed that there are no

challenges faced in local revenue collection though they never

identified the reasons why there are no challenges.

Table 11: The challenges faced in revenue collection Kaberebere Town Council Responses Male Female Frequency Percentage

Hard to monitor 12 5 17 34Limited resources and

skills

5 3 8 16

Corruption 1 0 1 2Late assessment 11 7 18 36Others 4 2 6 12Total 33 17 50 100Source: Primary data, 2014

The researcher observed that revenue collection is facing

challenges in Kaberebere Town Council, Isingro District; which

among others include; It is indicated that 34% of the

respondents revealed that it is Hard to monitor revenue

collection especially when private collection is being used

lxviii

.This is also in line with what Kiser (1994) observes that

there is a dilemma in monitoring the process of private

revenue collection. Additionally, Svensson (2003) looks at

revenue collection as associated with the challenge of

monitoring especially with the intention of curbing all the

associated inefficiencies.

While 16% contented that the revenue collection in the

Division is faced with the challenge of Limited resources and

skills. 36% of the respondents revealed that there is a

challenge of late assessment and the respondents also said

that assessment sometimes delay and this affect the paying

process making it hard to collect revenue in time as well as

service delivery .

2% of the respondents revealed that corruption is also a

challenge to revenue collection .This is in line with what

Svensson (2003) said in chapter two that it is further

observed that vulnerability to corruption and tax evasion were

common features of all tax systems in developing countries and

this intensified the burden for monitoring. Lastly 12% of the

respondents revealed other challenges like double assessment,

higher taxes being assessed irrespective of the business size,

Services delivered are not equivalent to the taxes paid.

4.6 Measures to overcome challenges faced in revenue

collection in Kaberebere Town Council, Isingro District

Table 12: Measures to overcome challenges faced in revenue collection

Solutions Femal

e

Male Frequen

cy

Percentage

lxix

Identifying other sources

of funds

5 13 18 36

Early assessment 7 4 11 22Fair assessment and good

relationship between tax

payers and tax collectors

1 8 9 18

Sensitization and mass

education to local tax

payers

3 3 6 12

Giving copies of tax rates

to tax payers

1 5 6 12

Total 17 33 50 100 Source: Primary data, 2014

According to the study, 36% of the respondents revealed that

in order to overcome the challenge of limited fund and

resources. Other sources of funds should be identified such as

local government fund, Matooke sellers should also pay tax in

order to increase on local revenue as well as service

delivery. While 22% of the respondents identified other

measures like fair assessment and good relationship between

tax payers and local revenue officials in order to make it

easy for them to take their complaints and negotiation in

case over double assessment, over assessment and this will

help them to pay in time and avoid delay.

Early assessment of taxes. This was revealed by 18% of the

respondents, “They say that trading license is for the whole year, so when they

assessed me in October and yet the year was ending I decided not to pay because

the year was ending and I couldn’t pay for two months remaining when knowing

that next year am to pay again.” It was mentioned during the

lxx

discussions with the respondents and it was said by a

respondent from Kaberebere Town Council ward. Therefore, they

revealed that when tax is assessed in time, they get prepared

and pay in time.

Sensitization and mass education to local tax payers was also

identified as one of the measures and this was revealed by 12%

of the respondents. One of the respondents from Kaberebere

Town Council ward. Said; “We fail and we refuse to pay these taxes because

we don’t know the reason why we are paying” and this can be avoided by

sensitizing them about the role of local revenue towards

service delivery.

Lastly 12% of the respondents revealed that they should be

given copies of tax rates and they know how much they are

supposed to pay. “How do I know that I belong to grade one or two?” This

was said by one of the respondents from Kaberebere Town

Council who said that they normally see people assessing and

giving them assessment papers not knowing how they are graded.

Therefore, there is need for copies of tax rates alongside

assessment forms.

4.3.0 Relationship between local revenue and service delivery

The study further sought to understand the relationship

between local revenue and service delivery. The respondents

selected during the study revealed the following as in table

13

Table 13: Relationship between local revenue and servicedelivery

Response Male Female Frequency PercentageYes 33 16 49 98No 00 01 01 2

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Total 33 17 50 100Source: Primary data 2014

According to the study findings as indicated in table 13 local

revenue and service delivery, 98% of the study respondents

said that there is a relationship between local revenue and

service delivery as compared to only 02% of the respondents

who reported that there is no relationship between local

revenue and service delivery as such respondent did not

explain why he thought of such.

However, during an interview some respondents were able to

reveal that there is a relationship between Local revenue and

service delivery. Respondents indicated that when revenue is

collected, it is used to provide services like roads, security

facilities, collection of garbage and provision of good and

purified water hence a relationship between the two variables.

These study findings implied that Local revenue influence the

service delivery since the revenue collected is used to

improve on the services delivery and increase local government

funds.

Hypothesis testing

The hypothesis was tested scientifically with the guide of two

hypotheses formed in chapter one that is; Null (Ho) and the

alternative (HI) as;

Ho: local revenue has an impact on service delivery

H1: Local revenue has no impact on service delivery.

Table 14: Showing whether there is a relationship between local revenue andservice deliveryResponse x x2 y y2 x y

33 1089 0 0 0

lxxii

16 256 01 1 16 x =49∑ ∑

x2=1345

y =1∑ y∑ 2=1 x y =16∑

Source: Field data, 2014

Table 14 shows the relationship between local revenue and

service delivery. It was tested using the Pearson’s

coefficient of Correlation using the formula below.

r = n x y - ∑ ﴾ ∑ x y ∑

√n﴾ ∑ x2) - ﴾ ∑ x)2 √n﴾∑y2) - ﴾∑y)2

Where

r = correlation coefficient

y = No response

n = sample size

x = yes response

r = 50 ﴾16) - ﴾49 x 01)

√50 ﴾1345) - ﴾49)2 √50 ﴾012) - ﴾01)2

r = 751

√67250 - 2401 √50 - 1

r = 751

√64849x √49

r = 751

1783

r = 0.42

Conclusion.

Since the calculated r is positive (0.42), it shows that there

is a positive relationship between local revenue and service

delivery. Hence the null hypothesis is rejected and the HI

hypothesis which states that there is relationship between

local revenue and service delivery in Uganda.

lxxiii

lxxiv

CHAPTER FIVE

DISCUSSION OF THE STUDY FINDING, CONCLUSIONS AND

RECOMMENDATIONS

5.0 Introduction

This chapter presents the study findings’ conclusions and

recommendations revealed about the role of local revenue on

service delivery in Kaberebere Town Council and also those

recommendations and conclusions observed by the researcher

relation with the other chapters studied in this research.

5.1 Discussion of the study finding

5.1.1 To find out the methods of revenue collection in

Kaberebere Town Council.

Findings from the research study show that Kaberebere Town

Council collects local revenue from different sources and

they include licenses and permits, parking fees, fines and

penalties, rent and rates, market dues in order to deliver

services to the people.

5.1.2 To find out how revenue collected has helped in service

delivery in local governments

In Kaberebere Town Council local revenue collected has led to

improved service delivery and the services that have been

delivered include extension of agricultural services, boosting

primary education, construction of health centres’,

construction of feeder roads, maintenance and sustainability

of development projects like early and child nutrition,

provision of safe drinking water and sanitation services,

financing sporting activities, financing the registration of

lxxv

tax payers and training their employees to ensure maximum

production in Kaberebere Town Council.

5.1.3 To find out the challenges faced in revenue collection

in Kaberebere Town Council.

There has been low local revenue collection in Kaberebere Town

Council and this has been due to the harshness of tax

collectors, high administrative expenses corruption practiced

by revenue officers ,inadequate sources of revenue, political

intervention for example tender defaulters who supported

politicians during campaigns are being protected by tax

authorities, poor enforcement of rules and procedures of

collecting revenues, tribalism, low incomes and wealth which

reduces the tax base thus leading to low local revenue

collection and thus low service delivery in Kaberebere Town

Council.

5.1.2 To document possible solutions to the challenges faced

in revenue collection

The research findings showed that even though most of the

challenges were inherent in the structures of the Local

Government, they were not beyond control. It showed that low

or poor revenue collections within the Town Council Local

Government could be improved by implementing various policies,

such as; motivate the tax authorities, check on political

interference, sensitizing communities, privatization of

revenue collection services, increase on Government grants to

Local Governments.

lxxvi

5.2 Conclusions

Based on the findings of the research, nature and the

magnitude of the role of local revenue on service delivery in

Kaberebere Town Council, Isingro District. It has also

identified challenges faced in revenue collection, and the

recommendations to make the service delivery successful in

Kaberebere Town Council, Isingro District.

It is concluded that Local revenue have a positive impact on

service delivery in Kaberebere Town Council, Isingro District

and when local revenue is collected ,services like

infrastructure, town planning, public libraries, garbage

collection and education facilities are provided. Therefore,

local revenue should be collected.

Local revenue in Kaberebere Town Council, Isingro District is

faced with Limited Resources and skills, corruption and

political influence, hard monitoring systems and late

assessments which make service delivery hard to implement

effectively. Lastly, the study concludes that local revenue

has a positive impact on service delivery in Kaberebere Town

Council, Isingro District

5.3 Recommendations

Basing on the discussion of the study findings, conclusions of

this report, the study recommends the following;

There should be increase in service delivery that is

establishment of infrastructure like roads, bridges,

electricity, schools and hospitals to attract investors and

developers in the division in order to expand tax base.

lxxvii

Enough sensitization. People should be sensitized over

different medias like radios televisions workshop about the

role of local revenue in service delivery and they should also

be informed about what they use their money for.

Timely accountability to tax payers should be done in order to

avoid wastage of local revenue collected and ensuring proper

allocation of services to the community.

Trading licence act should be amended to match the calendar

year with in financial year. This should be done by early

assessment of trading licenses in order to avoid delay in

payments.

Study findings also revealed that there should be

computerization of data captured during assessment .This can

improve supervision, monitoring and ease local revenue

collection.

Identification of other sources of income so as to boost tax

base for example some act5ivities which are being carried in

the Division should start paying taxes in order to increase on

revenue and service delivery as well.

Tax should be paid in installments in order to make it easier

for tax payers who cannot afford the whole amount assessed.

This was suggested by tax payers who have small businesses and

they revealed that when they decide to pay the whole amount,

their businesses end up being affected by the amount removed

from them.

lxxviii

5.3 Suggested areas for further research

The study focused on the role of local revenue on service

delivery in Kaberebere Town Council, Isingro District, for a

comprehensive and exhaustive study to draw conclusions the

study recommends further research on;

The sources of local revenue in Kaberebere Town Council,

Isingro District

More research should also be conducted on ways of enhancing

local revenue base in local government.

REFERENCE

Abigaba, F, (1996) Decentralization of service delivery in local authorities,

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APPENDIX 1

QUESTIONNAIRE FOR THE PUBLIC AND LOCAL AUTHORITIES

Dear Respondents

I am MUTAKIRWA MARTN,, a student of Bishop Stuart University

offering a Bachelors Degree in Business Administration. (BBA).

I am carrying out my research on ‘Local revenue and service

delivery in lower local government, a case study of Kaberebere

Town Council in Isingro district’ I kindly request you to

provide the necessary information having chosen you to be one

of the respondents to enable me complete my research project

successfully. This questionnaire is for academic purposes

only.

Thank you in advance.

SECTION A: Demographic characteristics of respondents. (tick

where appropriate)

1.Gender MaleFemale

2. Age Below 2021- 3031- 4041 and above

3. Marital Status SingleMarried

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SeparatedDivorced

4. Education Level Primary Secondary Tertiary University Others specify

5. For how long have you been inthe field of employment?

Less than 2 year 2-5 yrs 5-7 yrs 0ver 8 years

6. What position do you hold inKaberebere Town Council?

Revenue officer.Senior financesecretaryMember of tenderboard.Sub –county chiefsub-accountant.Tax payer

Section B: To find out the methods of local revenue collection

in Kaberebere Town Council, Isingro District.

7. Do you think there are methods used to collect local

revenue in Kaberebere Town Council?

(a).Yes

(b).No

8. If ‘Yes’ what methods are being used?

……………………………………………………………………………………………………………………………………………………………………

…………………………………………………………………………………………………………………………………

9. If ‘No ‘how do think local revenue can be collected?

……………………………………………………………………………………………………………………………………………………………………

…………………………………………………………........................................

..............................................................

........

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Section C: To find out how revenue collected has helped in

service delivery.

10. Has revenue collected helped in service delivery in

Kaberebere Town Council, Isingro District?

(a). Yes

(b). No

11. If “Yes” Which services has been delivered to Kaberebere

Town Council?

………………………………………………………………………………………………......

……………………………………………………………………………………………………………………………………………………………………

………………………………

12. If ‘No ‘why?

……………………………………………………………………………………………………………………………………………………………………

…………………………………………………………........................................

..............................................................

........

Section D: To find out the challenges faced in local revenue

collection in Kaberebere Town Council.

13. Are there challenges faced in the local revenue collection

in Kaberebere Town Council?

(a). Yes

(b) No

14. If ‘Yes’ what are challenges faced in revenue collection

in Kaberebere Town Council?

(You can give more than one answer)

……………………………………………………………………………………………………………………………………………………………………

………………………………..

…………………………………………………………………………………………………..

15. If ‘No’ why do you think so?

…………………………………………………………………………………………………

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…………………………………………………………………………………………………

16. How are the challenges faced in question (13) above

hindering service delivery in Kaberebere Town Council?

……………………………………………………………………………………………………………………………………………………………………

…………………………………………………………………………………………………………………………………

Section E .To document possible solutions to challenges faced

in revenue collection in Kakoba Division.

17. What do you think can be done to overcome the challenges

faced in local revenue collection in Kaberebere Town Council?

……………………………………………………………………………………………………………………………………………………………………

…………………………………………………………………………………………………………………………………

18. Do you think there is a relationship between local revenue

and service delivery? (Specify)

……………………………………………………………………………………………………………………………………………………………………

…………………………..........

19. In your opinion, what conclusions can you draw from the

local revenue and service delivery in Kaberebere Town Council,

Isingro District?

……………………………………………………………………………………………………………………………………………………………………

…………………………………………………………………………………………………………………………………..

20. What recommendations can you draw from the concepts local

revenue and service delivery in Kaberebere Town Council,

Isingro District?

…………………………………………………………………………………………………..

..............................................................

..............................................................

..............................................................

..............................................................

....................................................

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Appendix II: INTRODUCTORY LETTER

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