Minister Urges Local Governments to Boost Revenue Collection

Minister of State for Finance, Planning and Economic Development Amos Lugoloobi has issued a strong call to local governments across Uganda to enhance their revenue collection capabilities. Speaking at the inaugural Local Government Own Source Revenue Conference in Kampala, Lugoloobi emphasized that the current five-year political term presents a crucial opportunity for local authorities to become more financially self-sufficient.

Data presented at the conference revealed that local governments collected Shs442.64 billion in own-source revenue last financial year, a figure representing only about 5% of their total expenditure and a mere 0.18% of Uganda’s GDP. This falls significantly short of the East African average of approximately 1.27%.

Lugoloobi reminded leaders that the Constitution empowers local governments to raise revenue for service delivery, urging them to explore avenues beyond central government transfers. He specifically mentioned property rates, business licenses, and market dues as potential sources that are currently underutilized.

Despite improvements in revenue growth, partly due to automation, significant collection gaps persist. Isaac Musumba, chairperson of the Local Government Finance Commission, noted that while property rates are the largest single source, 83 out of 176 local governments failed to collect any property rates last year. Weak enforcement, incomplete taxpayer registers, and reliance on manual methods were identified as key challenges. The commission estimates that local governments could potentially collect Shs1 trillion annually if all opportunities were exploited, but current collections are only at 44% of this potential.

Minister Lugoloobi also criticized political interference in revenue enforcement, warning that obstructing revenue officers harms service delivery by depriving health centers, roads, and markets of necessary funding. He highlighted the success of the Integrated Revenue Administration System (IRAS) in improving collections and accountability in areas like Gulu and Mbarara cities.

The Fourth National Development Plan aims for Shs805 billion in annual local government own-source revenue by 2029/30, a target that requires sustained growth. Lugoloobi urged leaders to connect revenue collection to visible improvements in public services to encourage compliance.

Source: Nile Post