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Poverty and Human Development Report 2009 - UNDP in Tanzania

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Local Governments’ Share of Public Expenditures<br />

LGA budgets have <strong>in</strong>creased <strong>in</strong> absolute terms, but their relative share of total recurrent<br />

expenditure rema<strong>in</strong>ed between 17 to 19% until 2005/06. In 2006/07 <strong>and</strong> 2007/08, the LGA share<br />

<strong>in</strong>creased to 24% <strong>and</strong> 23% respectively, <strong>in</strong> part due to an <strong>in</strong>crease <strong>in</strong> teachers’ numbers <strong>and</strong><br />

salaries which constitute a large share of LGAs’ recurrent budgets (Table 26).<br />

Table 26: Local Governments’ Share of Government Recurrent Budget,<br />

2001/02 to 2007/08<br />

Fiscal Year<br />

Total Recurrent Expenditure<br />

(TShs billion)<br />

Local Government Share<br />

2001/02 1,253.1 18.7%<br />

2002/03 1,527.8 19.0%<br />

2003/04 1,834.1 17.7%<br />

2004/05 2,252.3 17.0%<br />

2005/06 2,875.6 18.6%<br />

2006/07 3,142.3 24.3%<br />

2007/08 3,398.0 22.9%<br />

Source: PMO-RALG, 2007c; Budget Execution <strong>Report</strong> Fiscal Year 2007/08<br />

CHAPTER 1 - CLUSTER III - GOAL 2<br />

The LGAs’ share of development fund<strong>in</strong>g is even lower; only 17% of the total development<br />

budget based on 2007 estimates (PMO-RALG, 2007c).<br />

Revenue Collection<br />

LGAs collected approximately TShs 63 billion <strong>in</strong> local taxes <strong>in</strong> 2007 (pr<strong>in</strong>cipally service levies <strong>and</strong><br />

produce cesses <strong>in</strong> rural councils, <strong>and</strong> fees <strong>and</strong> property taxes <strong>in</strong> urban councils) (Table 27). This<br />

represents only 7% of total LGA expenditures, which <strong>in</strong>dicates that local government budgets<br />

overwhelm<strong>in</strong>gly rely on fiscal transfers from the central government. Urban LGAs collect almost<br />

five times as much revenue per capita as rural LGAs. The most significant growth potential <strong>in</strong><br />

revenue collection is also found <strong>in</strong> urban councils. In the budget announced <strong>in</strong> June 2004, a<br />

range of “nuisance” taxes were abolished which particularly affected rural councils. S<strong>in</strong>ce then,<br />

local revenue collections <strong>in</strong> both rural <strong>and</strong> urban LGAs have risen.<br />

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