The Local Government Finance Commission (LGFC) wants government to allocate 38 per cent of the national budget to local governments in a bid to improve service delivery.
Uganda does not have a constitutional provision on the percentage of national revenue the central government should transfer to local governments. As a result, the amount fluctuates, which the LGFC say means much of the money remains with the central government and yet it is the local governments that do much of the service delivery.
“Government should not pass on less than 38 per cent,” Mr Jim Ashaba Aheebwa, LGFC’s director Finance and Administration, said on Wednesday, while presenting the LGFC 2013/14 Annual Report to the Speaker of Parliament, Rebecca Kadaga.
“Our concern is that although Shs2.3 trillion went to the local governments this fiscal year, this is only 12 per cent of the 2015/16 fiscal year budget,” added Mr Lawrence Banyoya, the commission secretary.
However, critics fault many local governments for failing to spend much of the money the central government gives them. For instance, in the 2013/14 fiscal year, local governments failed to absorb Shs260b, according to the latest LGFC Annual Report.
The Uganda Local Governments Association has in the past accused the central government of releasing a lot of money to the local governments in the last quarter of a financial year yet they fail to spend all of it within the stipulated year and, thus, have to return it.
Ms Kadaga said whereas district local governments are “getting bigger, their resources are reducing”.
Also, the commission said the government should remove exemptions on eligible local service taxpayers “as adversely affected the LG cash flows.”
The Local Government Finance Commission advices the government on revenue distribution between the central and local governments.