Determinants of Revenue Collection Performance in Tanzanian Local Governments
Keywords:
Local government authorities, revenue collection performance, intergovernmental grant in TanzaniaAbstract
Tanzania introduced Decentralization by Devolution reforms (D by D) in 1998 whereas one of its objectives is to enhance fiscal autonomy to Local Government Authorities (LGAs). Despite such effort, the level of financial dependence is still very high. This paper examines the determinants of LGAs’ own revenue collection performance as a vital aspect towards reducing the dependence rate. It estimates regression model using panel data of 133 councils aggregated into 25 regions, from 2008/09 which is 10 years after reform introduction to 2018/19. The results indicate that financial dependence ratio, regional share of GDP and own source revenue per capita have negative impact on own source revenue collection performance; they provide unattractive signs towards overall fiscal position of the nation. In contrast, the paper finds that budgeted grant per capita and government grant disbursement ratio have positive impact on own revenue collection performance. The paper recommends the government to re-visit reform execution to eliminate soft budget constraints and other inefficiencies in LGAs’ revenue mobilisation, hence reducing fiscal burden to the central government.
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