Framework for a Strategy of UP Revenue/Resource Mobilisation ...

o) A record should be maintained of payments of business tax / licences against each business in
the register (as pro-forma will be developed). This will show clearly which businesses have not
paid for the current year. Where a business has not applied for a licence by the due date (say,
30 th September), the collector should visit the business and require payment. If no payment is
forthcoming, the steps outlined above in (k), (l) and (m) should be adopted. The ultimate
sanction would be to close the business.
p) Where possible, follow-up action in relation to a business tax / licence should be integrated with
action to recover holding tax from the same property, so as not to duplicate effort.
q) Simple computerised spread-sheets can help improve revenue performance, by tabulating
clearly assessments, arrears, payments and outstanding balances. Cross-checks can easily be
made and the list of defaulters can be produced. However, UP require someone with knowledge
of computers, and preferably more than one person, to reduce the scope for fraud by the system
manager. Automatic checks should be built into the software to prevent fraudulent transactions.
Also, paper copies of all records should be maintained to reduce the risk of loss of data through
system failure or data corruption.
r) Overall performance of revenue collection can be motivated by the inclusion in any grant
system (including the LGSP-LIC grant allocations) of a performance indicator or indicators
based on revenue performance. One indicator might be that the UP has compiled a holding tax
assessment register and a business tax/licence register in the approved form. Another indicator
might be performance of collection against assessment (i.e. effectiveness – what proportion of
the assessed tax has been collected). An alternative indicator might be the percentage increase in
tax revenue. 16 In addition, there might be competitions between UPs within a district to see
which could collect the highest proportion of assessed tax with small rewards for the Chairman,
elected members and officials of the best performing UP.
VI. Rationale and Challenges of UP Revenue Strategy
This is an opportune moment to be proposing improvements for enhancing UP revenues, for a
number of reasons. Firstly, the Committee for Accelerating and Strengthening Local Government
reported in November 2007. Among its recommendations, it identified the revenue sources of UPs
which are given below 17 :
� ensuring that local tax assessments are updated every five years;
� improving revenue collection performance of local governments;
16 The indicator should not be the total amount collected, since that would favour UPs with greater revenue potential.
17 This list is based on the English language summary of the Committee’s report.
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