Local govts asked to boost revenue collection

By Joel Ogwang                                                                                     

The permanent secretary in the Ministry of Local Government , Patrick Mutabwire has urged district leaders to promote local economic growth as a sustainable source of their revenues following the ban, in 2005, of Graduated tax (G-tax).

Citing NAADS that has, in the recent past, come under scathing attack over supply of poor quality seeds and animals alongside financial abuse that resulted in a Presidential ban, he said empowering the local populations to participate in income generating activities was a more sustainable way to encourage local growth and development.

“The problem with NAADS was that it didn’t empower local people to participate in key decision making processes, especially the procurement of inputs.

"Businessmen hired to supply inputs were interested in making profits (by inflating prices). When you empower a squatter to earn, buy land and invest in a business, you increase his/ her income and broaden the district’s tax-bases,” Mutabwire said.

He was speaking during a mid-term review of the first cycle of the 5-year National Development Plan (NDP) by leaders from 11 districts at Colline Hotel, Mukono.

The review, organised under the auspices of the USAID-funded Strengthening Decentralisation for Sustainability (SDS) Program, evaluated local governments on the alignment of District Development Plans (DDPs) to NDPs in order to improve social service delivery.

In 2006, the government banned G-tax under the pretext that it was retrogressive, barbaric and its collection costly. However, the tax was a cash-cow for districts that at the time it was outlawed, local governments were reaping sh65b.

While the government introduced G-tax compensation, with districts receiving sh45b annually, this proved insufficient.

Even the hotel and services tax that was introduced as a successor to G-tax has proved ineffective, with districts struggling to raise even half of what the former yielded, curtailing local revenue generation and worsening their financial woes.

With the development of the Local Governments sector strategic plan and a planned review of the Local Government’s Act in December 2013, Mutabwire urged districts to develop flagship plans so as to open-up the country and improve competitiveness in all sectors.

“How will Uganda be competitive when districts are not? We must develop districts’ competitiveness index to promote their growth. Unless we get it right at sub-national level, we will not succeed with NDP. We also need to have a well-coordinated development by aligning DDTs to NDP and thin globally while acting locally,” he said.

Othieno Odoi, the senior planner in-charge of trade and tourism at the National Planning Authority (NPA), noted that the first review of the NDP (2010/ 11- 2014/ 15) was supposed to be done in all the 111 districts after two and a half years.

However, this wasn’t possible due to logistical challenges, he said, adding that when the government adopted the decentralisation policy, it devolved powers and not resources.

“Districts have a challenge raising their own revenues by not just coordinating activities that raise incomes, but also ensure their equitable distribution,” he said.

For meaningful local and national development, Odoi called for the alignment of sub-county development plans to DDPs and NDPs to ensure improved service delivery.