CRITICAL INVESTIGATION OF THE CHALLENGES AND PERFORMANCE OF INTERNALLY GENERATED REVENUE MOBILIZATION
Need help with a related project topic or New topic? Send Us Your Topic
DOWNLOAD THE COMPLETE PROJECT MATERIAL
CRITICAL INVESTIGATION OF THE CHALLENGES AND PERFORMANCE OF INTERNALLY GENERATED REVENUE MOBILIZATION
INTRODUCTION
1.1 Background Of The Study
Many African countries are beginning to decentralise in order to strengthen the role of regional and local governments in development (World Bank, 1999a). The premise is that decentralisation will improve the prospects for communal development.
Decentralisation is also viewed as an important strategy for aligning public expenditure with local priorities, boosting management incentives, and increasing accountability to service consumers at the point of delivery.
In a nutshell, decentralisation will enable local governments to manage local development efforts within their jurisdiction based on local needs, priorities, and resources (Ikeanyionwu, 2001).
The decentralisation of local government administration to the district level was a major trend in Ghana in the mid-1980s, with the purpose of fostering local development as a means of promoting the country’s development.
The adoption of decentralisation was founded on Charles Lindblom’s incrementalism thesis, which he developed in 1959. Incrementalism is the polar opposite of intrusive central planning, which can lead to rigid work structures that cannot deal with real-world problems.
According to Lindblom, incrementalism is a planning methodology that is commonly used when a large strategic plan (such as the centralism forms of government that preceded decentralisation in Ghana) fails to develop the country, and it is often referred to as “muddling through” as a result. According to the incrementalist viewpoint, national growth can occur at the local or grassroots level.
As a result, empowering Ghana’s local governments to achieve local development would result in national development. Incremental work is difficult to maintain inside structured systems that lack a central planning framework, such as the central government, necessitating a level of self-reliance, talents, and knowledge from those dealing with the issues.
In Ghana, decentralisation means shifting decision-making power and discretion from the central government to local governments. The issue of local government accountability increases the demand for financial resources, often known as fiscal decentralisation.
The idea is that in order for local governments to function successfully, they must have adequate income (generated locally and/or transferred from the central government) as well as the authority to make spending decisions. Fiscal decentralisation is the process of spreading public funding and duties across multiple levels of government.
Ikeanyionwu (2001) and Bandie (2003: 4) believe that local governments should be provided financial resources to carry out their decentralised responsibilities. Yaw-Nsiah (1997:12) defines fiscal decentralisation as the transfer of power to sub-national governments to mobilise, allocate, and manage financial resources in accordance with locally specified priorities.
Economic efficiency and local revenue mobilisation are the two primary arguments for fiscal decentralisation as a means of achieving local development (Bahl & Linn, 1992; Oates, 1993). Fiscal decentralisation aims to improve local governments’ finances and, as a result, their ability to offer public goods and services.
The goal is to provide local governments some revenue and spending autonomy, as well as the flexibility to set the size and structure of their expenditure budgets. Local residents can use their District Assembly to raise cash from internal sources such as rates, penalties, taxes, land, and licences.
Because they are familiar with their local economy, District Assemblies will be best positioned to mobilise internally generated revenues from the fastest-growing sectors of their economic base. This will allow the local government to mobilise more financial resources at a lesser cost than the central government.
Local governments, on the other hand, can invest in programmes that address locally identified development needs thanks to fiscal decentralisation. This allows local citizens to voice their wishes and preferences while also participating in the governance of their affairs.
This technique of including the community in development activities ensures that every resource is used effectively to benefit each individual while reducing waste and inefficiency.
In Ghana, the concept of decentralisation as a developmental phenomena requires District Assemblies to generate their own resources for developmental activities within their geographical areas through financial decentralisation and autonomy.
As a result of the legal provisions, the District Assemblies are given different tax streams to use domestically for development. This was part of a bigger plan to grant the assembly financial autonomy so that they might shape their own future.
Given that District Assemblies are responsible for the overall development of their districts, and that any funds received from the District Assemblies Common Fund will be contingent on their own internally generated resources, each district should assess its own revenue generation efforts and results.
According to Article 252, subsection 2 of Ghana’s 1992 constitution, the parliament shall split central government transfers to local governments based on a specific formula. This formula promotes increased internal revenue collection with larger government transfers, and vice versa.
Internally generated revenues, in particular, are a critical component of Ghana’s fiscal decentralisation. This is because decentralisation entails local governments earning revenue to augment federal transfers.
When considered in the context of insufficient and delayed central government payments, the importance of internally generated resources becomes even more apparent (Bandie, 2003, p. 184).
For example, Solomon Boar, the Member of Parliament for Bunkurungu, alleges that the country’s District Assemblies are struggling because the government has yet to distribute statutory funds for the District Assemblies’ Common Fund.
He further says that from January to September 2013, the administrator of the District Assemblies’ Common Fund did not transfer the funds to the MMDAs (myghanaonline.com/?id=1.1491002).
According to the theory, local governments must be financially stronger in order to lessen their reliance on federal financial transfers and assistance (Brosio, 2000; Smoke, 2001).
As a result, revenue collection administrations in these local governments will be more efficient and capable of successfully managing internally generated funds (Odd-Helge, 2006).
The theoretical argument is that internally generated revenue is essential to achieve local development and supplement central government payments, but that current levels are insufficient to stimulate local development given the district’s expanding population and the need for development projects.
To maintain a critical minimum effort in local growth, a significant increase in internally generated funds is required. The Abura-AsebuKwamankese District Assembly plans to invest in local development with increased revenue collection from internal sources.
Need help with a related project topic or New topic? Send Us Your Topic