Finance denies LCs extra funds
Jan 08, 2008
THE finance ministry has rejected a supplementary request of sh25b as compensation to local governments for the Graduated Tax, which was scrapped in 2005.
By Mary Karugaba
THE finance ministry has rejected a supplementary request of sh25b as compensation to local governments for the Graduated Tax, which was scrapped in 2005.
The ministry has instead agreed to release only sh12b of the requested funds, explaining that it was not possible to raise all the money since it was spent on activities like CHOGM.
Sh33b is already in the budget under an unconditional grant, which brings a total provision of sh45b this financial year.
A meeting of ministers of finance and local government and other local government officials chaired by Prime Minister Apolo Nsibambi last year reportedly failed to agree on the amount to be released.
Nsibambi has since written to President Yoweri Museveni seeking advice on how to raise the required sh25b.
According to the letter, Nsibambi said the money is to enable lower and higher local governments become functional.
He added that the money would also help higher local governments raise funds to meet their co-funding obligations of donor-funded programmes.
During the budget speech, the Government introduced Local Government Service Tax to raise funds for the districts.
However, Nsibambi argued that since the proposed tax may not come into effect and will not yield additional revenue for local governments this financial year, the supplementary funds should be considered.
“When I urged the finance minister to raise sh25b instead of sh12b, he said it was not possible due to requirements such as CHOGM, emergency for flood victims and the ARVs plant in Luzira,†the premier noted.
THE finance ministry has rejected a supplementary request of sh25b as compensation to local governments for the Graduated Tax, which was scrapped in 2005.
The ministry has instead agreed to release only sh12b of the requested funds, explaining that it was not possible to raise all the money since it was spent on activities like CHOGM.
Sh33b is already in the budget under an unconditional grant, which brings a total provision of sh45b this financial year.
A meeting of ministers of finance and local government and other local government officials chaired by Prime Minister Apolo Nsibambi last year reportedly failed to agree on the amount to be released.
Nsibambi has since written to President Yoweri Museveni seeking advice on how to raise the required sh25b.
According to the letter, Nsibambi said the money is to enable lower and higher local governments become functional.
He added that the money would also help higher local governments raise funds to meet their co-funding obligations of donor-funded programmes.
During the budget speech, the Government introduced Local Government Service Tax to raise funds for the districts.
However, Nsibambi argued that since the proposed tax may not come into effect and will not yield additional revenue for local governments this financial year, the supplementary funds should be considered.
“When I urged the finance minister to raise sh25b instead of sh12b, he said it was not possible due to requirements such as CHOGM, emergency for flood victims and the ARVs plant in Luzira,†the premier noted.