Districts to get more funding from central government
Jun 17, 2009
The 2009/10 budget has apportioned, over sh1.25trillion to local governments.
BY JOSHUA KATO
The 2009/10 budget has apportioned, over sh1.25trillion to local governments.
This was a slight increase from the 2008/09 budget allocations, when they received sh1.2trillion.
The national budget was read at a time when the districts were also preparing to read their own budgets. However, it became clear that at least 95% of funding for the districts will come from the central government.
This is in contrast to the national budget, where the amount of funding the Government receives from donors has dropped to 33%.
Districts expect to receive over 95% of their budget funding from the central government.
More than 95% of this is spent on paying salaries, with the rest used for development work.
The main emphasis of the funding is the key priority sectors such as education, health, infrastructural development and agriculture.
At the end of every financial year, every district is given an estimate it will get from the central government.
The district is then asked to budget for this money and the funds that are internally generated from the district’s local sources.
Article 191(3) of the Constitution and clause 83 of the Local Government Act empowers districts to prepare budgets every financial year.
An analysis of the 2008/09 and the 2009/10 district budgets point at a very heavy dependence on the central government.
Of the sh31.7b budget passed by Wakiso district, 94% of the funds will come from the central government. Wakiso is able to meet at least 6% of the district budget because of their peri-urban location.
The central government will offer sh16b of the sh17b budget passed for Mpigi district this financial year.
In Rakai, the central government will offer sh17b of the sh19b passed.
Of the sh25b budget for Masaka, sh23b will come from the central government. In Kabale, of sh23b passed, 93% will be from the central government, while Kamuli will get 95% of the sh23b budget passed.
The districts argue that they are dependent on the central government because they cannot generate enough revenue, especially after the scrapping of graduated tax, four years ago.
They argue that politicians interfere with other tax sources like market dues, road tolls, bodaboda fees and property tax. “We do not have viable taxes to generate enough local revenue,†says Luweero LC5 chairman, Ronald Ndawula. Local governments were hoping for new taxes, but they were disappointed.
When the new taxes, namely the local government tax and the hotel tax started, it turned out that only a few urban areas benefited.
Throughout the 2008/09 financial year, less than sh700m was collected by local governments countrywide, compared to an estimated sh3b. According to local governments, most of the local government tax is collected from salaried workers, who work and live in urban areas. “At the end of the day, most of the local governments do not benefit,†says Ndawula.
“We do not have hotels in Kaliro, so we cannot benefit from the hotel tax,†says Kaliro LC5 chairman Elijah Kagoda.
Local governments call for the continuation of the graduated tax compensation scheme, as people get used to the new taxes.
In the 2006/07 financial year, the Government spent over sh45b on graduated tax compensation. Districts like Mukono received sh1.3b in compensation, while Mpigi received about sh780m. However, this was not the case with the 2007/08 budget, when a mere sh12b was shared among 80 districts. There was no compensation in the 2009/10 budget. “It was peanuts. How could 81 districts share sh12b?†wondered John Wycliffe Karazarwe, the president of the Uganda Local Governments Association.
If the number of districts was lower, the available funds would have been shared out more usefully.
The addition of new districts does not solve the problem. New districts are unable to raise enough revenue on their own yet they have immense needs. They, for example, have to hire offices, buy vehicles and hire staff.
In May, the local government minister, Adolf Mwesige, asked for sh3b to cater for the new districts. However, local governments must be vigilant in the way they are using the funds. “They should know hat this money is disbursed to help the people develop. They must be careful and accountable,†Mwesige says.
The 2009/10 budget has apportioned, over sh1.25trillion to local governments.
This was a slight increase from the 2008/09 budget allocations, when they received sh1.2trillion.
The national budget was read at a time when the districts were also preparing to read their own budgets. However, it became clear that at least 95% of funding for the districts will come from the central government.
This is in contrast to the national budget, where the amount of funding the Government receives from donors has dropped to 33%.
Districts expect to receive over 95% of their budget funding from the central government.
More than 95% of this is spent on paying salaries, with the rest used for development work.
The main emphasis of the funding is the key priority sectors such as education, health, infrastructural development and agriculture.
At the end of every financial year, every district is given an estimate it will get from the central government.
The district is then asked to budget for this money and the funds that are internally generated from the district’s local sources.
Article 191(3) of the Constitution and clause 83 of the Local Government Act empowers districts to prepare budgets every financial year.
An analysis of the 2008/09 and the 2009/10 district budgets point at a very heavy dependence on the central government.
Of the sh31.7b budget passed by Wakiso district, 94% of the funds will come from the central government. Wakiso is able to meet at least 6% of the district budget because of their peri-urban location.
The central government will offer sh16b of the sh17b budget passed for Mpigi district this financial year.
In Rakai, the central government will offer sh17b of the sh19b passed.
Of the sh25b budget for Masaka, sh23b will come from the central government. In Kabale, of sh23b passed, 93% will be from the central government, while Kamuli will get 95% of the sh23b budget passed.
The districts argue that they are dependent on the central government because they cannot generate enough revenue, especially after the scrapping of graduated tax, four years ago.
They argue that politicians interfere with other tax sources like market dues, road tolls, bodaboda fees and property tax. “We do not have viable taxes to generate enough local revenue,†says Luweero LC5 chairman, Ronald Ndawula. Local governments were hoping for new taxes, but they were disappointed.
When the new taxes, namely the local government tax and the hotel tax started, it turned out that only a few urban areas benefited.
Throughout the 2008/09 financial year, less than sh700m was collected by local governments countrywide, compared to an estimated sh3b. According to local governments, most of the local government tax is collected from salaried workers, who work and live in urban areas. “At the end of the day, most of the local governments do not benefit,†says Ndawula.
“We do not have hotels in Kaliro, so we cannot benefit from the hotel tax,†says Kaliro LC5 chairman Elijah Kagoda.
Local governments call for the continuation of the graduated tax compensation scheme, as people get used to the new taxes.
In the 2006/07 financial year, the Government spent over sh45b on graduated tax compensation. Districts like Mukono received sh1.3b in compensation, while Mpigi received about sh780m. However, this was not the case with the 2007/08 budget, when a mere sh12b was shared among 80 districts. There was no compensation in the 2009/10 budget. “It was peanuts. How could 81 districts share sh12b?†wondered John Wycliffe Karazarwe, the president of the Uganda Local Governments Association.
If the number of districts was lower, the available funds would have been shared out more usefully.
The addition of new districts does not solve the problem. New districts are unable to raise enough revenue on their own yet they have immense needs. They, for example, have to hire offices, buy vehicles and hire staff.
In May, the local government minister, Adolf Mwesige, asked for sh3b to cater for the new districts. However, local governments must be vigilant in the way they are using the funds. “They should know hat this money is disbursed to help the people develop. They must be careful and accountable,†Mwesige says.