Income Analysis of the Assembly
The Assembly performs so many functions that require money. For the above reason the assembly has been given the mandate to raise revenue to meet its expenditure requirements in addition to the District Assemblies’ Common Fund.Major sources of Internally Generated Revenue (IGF) are
1. Property Rate
2. Visits to Lakeside- Abono
3. Unassessed Building
5. Land Processing
6. Guest House and Tractor & Boat
External source of revenue includes GOG/ Donors. The income of the assembly can be analyzed based on the following revenue components- rates, share of stool land revenue, fees and fines, licenses, investments and grants.Revenue Generation
Until 1994, the major sources of revenue were fees, rates and licenses. In addition to these traditional sources is the recently introduced District Assemblies’ Common Fund, embodied in the 1992 Constitution of Ghana and implemented for the first time in 1994, This has come as the single largest source of income for the Assembly. It contributes about 75% of the annual revenue of the Assembly. For some years now, the building permit fee has been the mainstay of the Assembly finances. Excluding transfers, the building permit fees alone contribute about 55% of the total revenue from the Assembly’s Traditional Sources of Income. Building permit are statutory fees paid to the Assembly upon the approval of building plans.
Under the taxes are the basic and property rates, licenses and building permits. The basis for the rates is the immovable property and the resident adult population. The ratable population includes adults of 18 to 70 years. Students are however exempted. The property rate, on the other hand is levied on immovable properties. They include residential, commercial and industrial properties. Temporary structures also attract the rate. Exemption from property rate includes public places of worship, hospitals and clinics.
Licenses are based on economic activities in the district. This license or tax serves as the permit for undertaking any such activity in the district. Whilst some of such licenses are paid on annual or quarterly basis a greater number of them are paid on monthly basis, and thus increasing the cost of collection.
The non-taxes include market fees, other charges and rent as well as interest on investment. The fees are charges on tolls paid by users of the services provided by the Assembly. Examples are the market tolls, rent, lorry parks tolls, etc. Interest refers to the returns from monetary investment.
The transfers are made up of revenue from the central government sources and the Lands Commission to Assembly. Those from the central government include the ceded revenue, the common fund, wages and salaries of local government staff at Assembly. The common fund to the Assembly is “not less than 5% of the annual total revenue of country”. The objective of the fund is to make available to the District/ Municipal/ Metropolitan Assemblies additional resources for development.
The ceded revenue, on the other hand, is derived from specific revenue sources that the central government has “ceded” to the District Assemblies in pursuit of decentralization. Upon an approval formula, the Assembly receives its share from the Ministry of Local Government and Rural Development. The transfer from the Lands Commission is the Assembly’s share of lands revenue collected from stool lands in the District by the Commission.Estimation Of Income (Estimation Procedure)
The estimation of the Assembly’s income for the ensuing year starts with the preparation of the “Fee Fixing Resolution (FFR)” of the year. This is the document specifying the fees/ licenses and other charges for the various terms.
The Budget Committee, comprising of the Budget and Planning Officers, the Coordinating Director and the Finance Officer, makes proposals that are considered by the Finance and Administration Sub- Committee. The draft of the FFR is sent to the Executive Committee for approval. The approved draft FFR by Executive Committee for the General Assembly for consideration and approval. If there happens to be any changes, the necessary adjustments are made in the revenue projections accordingly.Characteristics Of Assembly’s Revenue Sources
This section discusses the characteristics of the revenue sources in terms of their yield/ output and instability.Yield
Administration Of Revenue
- Taxes contribute an average of 20% of the total Assembly’s Revenue. Taxes on movable property are the single most important source. Other relatively less significant taxes include livestock, poultry farms, kiosk, hawking, hawking, fuel, store, building and basic head (poll tax) from people’s visit to the Lake. These taxes constituting 16% of total tax items together produce over 90% of the total tax revenues.
- Non- Taxes share in total revenue is about 54%. Like taxes, this source is dominated by one source- market fees. This source has dominated other fees and charges, thus making them insignificant contributors.
- Growth Rate of Major Taxes: the growth rate of taxes in the district is negative (-0.5%) per annum. However, positive rates on output have been recorded by property tax (0.04%). Visit to the Lake (1.2%). Among the negative growth rated taxes are vehicle registration that is unpopular in the District, hawking license (0.28%) and building tax (0.10%).
- Instability: tax instability disturbs financial planning since that could throw the budget into disarray. Statistics show that the tax yields are fairly stable (instability index 0.08). This is attributable to the relatively stable property rates. Arguably, given the stability of the tax base, one might attribute the instabilities to changes in rate levels and poor collection performance.
The administration of revenue at the Assembly is of vital importance. The success or failure of the Assembly’s performance in terms of funds depends upon the effectiveness and efficiency of the revenue administration to generate the required income. The billing and collection effort by the Assembly has not lived up to expectation. A critical look must thus be taken into its administrative machinery and structure.Organisation
The organization for revenue mobilization is solely the responsibility of the accounts department with technical support from the Budget and Planning Unit. For the past four years, the Assembly has been employing two means to collect its revenue. They are:
- Its own staff who collect property rate and few other specific revenue items an Commission collectors who are in charge of about 80% of other licenses and some fees including those from the markets. The collectors collect revenue and pay same to the Assembly for a 30% commission on the gross amount collected.
- Revenue collection performance for the year 2002- 2005.
- Expenditure items of the year 2002- 2005.
- Expenditure pattern in the year 2002- 2005
From the tables presented, it can be deduced that the revenue performance of the District has not been very encouraging. Looking at the estimated and actual revenue over the years targets are not always met. This is due to the following reasons:
- People’ unwillingness to pay their basic rates.
- Revenue collectors not paying to the assembly all monies collected.
- Property owners avoiding the payment of property rates.
- Some individuals and small-scale enterprises engaged in economic activities avoid the payment of taxes to the assembly.
- Inadequate data on all economic activities in the district e.g. hairdressers, tailors, traders, barters, lotto kiosk etc.
There is therefore the need to improve the above conditions in order to meet targets set. If Assembly is able to generate a lot of revenue internally, some of the funds can be used to undertake development projects in the district instead of relying solely on the common fund.
Again if one matches the Assembly revenue to its expenditure over the years as seen in the table 1.12 (Revenue versus Expenditure)
In 2002, 2003, 2004 the Assembly’s revenue exceeded its expenditure. However, for the years 2005, the Assembly’s expenditure exceeded its revenue. This does not show efficiency in the management of the Assembly’s finances. The Assembly should therefore ensure that it always spends on what is stipulated in its budget for good financial management.Prudent Fiscal Management
The Local Government Act makes it very explicit that the expenditure may only be incurred provided that the expenditure is included in the approved budget of the District for the relevant year. Moreover, the assembly is guided by the FAR that is Financial Administration Regulations.
To abide by the Local Government Act and FAR any payments that the District Assembly makes is approved by the District Chief Executive and authorized by the District Coordinating Director.
The Local Government Inspector who serves as an internal auditor also independently pre-audits every payment made by the Assembly and gives his opinion.
The Local Government Inspector makes in each report such observations as appear to him necessary as to the conduct-of the financial officers of the Assembly during the period under review and finally sends copies of each report to the Local Government Minister, the District Chief Executive and the Regional Co-ordinating Council.Disbursement of the District Assemblies’ Common Fund in accordance with laid down Financial Regulations
Request/ memos are submitted to the District Chief Executive. Approval is then given and disbursement forms raised. The forms are endorsed by the District Chief Executive, District Co-ordinating Director and District Finance Officer as laid down by the Administrator of the Common Fund. Cheques together with the disbursement forms are sent to the Bank. Vouchers are raised upon submission of all relevant documents to support the voucher.Financing of Contracts
Contracts are mainly financed through the Common Fund and other interventions like the HIPC, CBRDP, GETFUND, Community Water and Sanitation Agency, Social Investment Fund etc. Almost all of the Assembly’s own locally generated revenue is used on recurrent expenditure.Checking and Eliminating Ghost Names
The Payment Vouchers are scrutinized monthly by the District Chief Executive and other Senior Management Staff to ensure that people no longer in the service have their names deleted.Activities that Support Food Production to Control Food Induced Inflation
(1a) Training and Visitation (T & V)
(1b) Participatory Rural Approach (P.R.A) with emphasis on home and farm visits
(2) Method demonstration
(3) Result demonstration
(4) Field days
(5) Farmers for a
(6) Agricultural shows/ Farmers days
The problem here is the limited number of AEA’s resulting in very high AEA: Farmer ratio (1:1,700) based on 41,351 farmers listed in the year 2005. There is also lack of accommodation facilities for the AEA’s. Only five (5) AEA’s have quarters at Kuntanase, Oyoko, Jachie, Beposo, and Sawua. AEA’s also lack means of transport. Out of 24 AEAs, only five have road worthy motorbikes.Key Development Problems
1) Low Revenue Base (One Item- Land processing accounts for 50% of the total revenue).
2) Low educational background of collectors.
3) Interference in revenue administration.
4) Weak expenditure controls.
5) Interference in running of budget e.g. Directives on certain expenditures from Regional and National levels.
6) Lack of means of transport to mobilize revenue.
Refer to tables in pdf file below.