Financing decentralized development in a low-income country: Raising revenue for local government in Uganda

Uganda has been engaged for a number of years in an ambitious programme of political and financial decentralization involving significantly expanded e xpenditure and service delivery responsibilities for local governments in w hat are now forty-five districts. Fiscal decentralization has involved allo cation of block grants from the centre to complement increased local tax re venue-raising efforts by districts and municipalities. This article is conc erned with the financial side of decentralization and in particular with an examination of district government efforts to raise revenue with the tax i nstruments which have been assigned to them. These are found to be deficien t in a number of ways and their tax raising potential not to be commensurat e with the responsibilities being devolved. Achievement of the decentraliza tion aims laid down, therefore, must depend either on the identification of new or modified methods of raising revenue locally, or increased commitmen t to transfer of financial resources from the centre, or both.