Revenue Self-Sufficiency for Local Governments

Local Government Authorities (LGAs) in Tanzania need to collect to become self-sufficient in executing their projects without relying on funds from the central government, we need to consider the following factors:

1. Current Revenue and Shortfalls:
   • For the fiscal year 2023/2024, LGAs were projected to collect TZS 1.14 trillion, but as of March 2024, they had collected TZS 848.14 billion.
   • For the fiscal year 2024/2025, the projected revenue is TZS 1.60 trillion.
2. Dependence on Central Government:
   • LGAs currently receive substantial funding from the central government for both recurrent and development expenditures. This support is crucial for covering the gap between locally collected revenues and the total budget required for their activities.
3. Total Budget Requirements:
   • To estimate the total budget requirements for LGAs, we should consider both their recurrent and development needs.

Assuming that the total budget required by LGAs for the fiscal year 2024/2025 can be inferred from the overall budget allocated to TAMISEMI and its sub-entities, we have:

• Total Budget for TAMISEMI and its sub-entities for 2024/2025: TZS 10.125 trillion
  • This includes salaries, other recurrent expenditures, and development projects.

Estimation for Self-Sufficiency

Calculation Approach:

1. Estimate the portion of the total budget that pertains to LGAs specifically.
   • Since TAMISEMI oversees not only LGAs but also other institutions and regions, we need to apportion the total budget accordingly. For simplicity, we can assume that a significant portion of the TAMISEMI budget is directed towards LGAs.
2. Current Revenue vs. Required Budget:
   • If LGAs need to match the projected budget and avoid central government dependency, they should aim to collect an amount closer to the total TAMISEMI budget or at least a significant portion of it.
3. Projected Self-Sufficiency Target:
   • If we assume LGAs need to be responsible for around 60-70% of the total TAMISEMI budget to cover their essential functions and projects independently, this can provide a rough estimate.

Calculation:

• Total TAMISEMI Budget for 2024/2025: TZS 10.125 trillion
• Assumed LGA Proportion (60-70%):
  • 60% of TZS 10.125 trillion = TZS 6.075 trillion
  • 70% of TZS 10.125 trillion = TZS 7.0875 trillion

Therefore, to achieve self-sufficiency, LGAs would need to aim for revenue collection in the range of approximately TZS 6.075 trillion to TZS 7.0875 trillion.

Hence, to be self-sufficient and execute their projects without relying on funds from the central government, LGAs in Tanzania would need to significantly increase their revenue collection to the range of TZS 6.075 trillion to TZS 7.0875 trillion annually. This represents a substantial increase from the current revenue collection figures and would require enhanced revenue generation strategies, improved efficiency, and effective local economic development initiatives.

Implementation Strategy:

• Enhanced Revenue Generation: LGAs should explore and implement strategies to boost local revenue collection. This could involve improving tax compliance, exploring new revenue sources, and optimizing revenue collection mechanisms.
• Efficiency Improvements: Streamlining operations and reducing inefficiencies can help stretch existing budgets further.
• Local Economic Development: Encouraging economic growth within local jurisdictions can increase the tax base and overall revenue potential.