The impact of local revenue structure and administration on district development – the case of West Gonja District

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To correct the spatial imbalance that has characterised the country since colonial ara, the PDC government has adopted self—reliant development philosophy by decentralising decision— making process to the local levels. By this, some development task has boon shifted from the centre to the local governments, but very little is known about the impact the district revenue structure and expenditure pattern has had on the local economies so fare It is not known whether the local governments have adequate and reliable tax base from which revenues can be generated to meet their development obligations. Whether the revenue sources identified for the district governments are administratively viable, and whether local taxes impose heavy burden on the population and impede economic activities, have also received peripheral attention. With these problems in viewed, and using West Gonja district as a case study, this study investigated into the adequacy or otherwise of the district tax base, evaluated the cost—effectiveness of revenue administration, measured the incidence of local taxes and assessed the impact of the district development activities. The methods used in collecting data for the study was through desk and field studies, The subject matter of data collected, included district revenue sources and expenditure pattern as published in the trial balances for the fiscal year 1986—89, and views of the community on the impact of the district development activities. From the study, it came to light that, the district has a potential economic base that can be tapped to raise revenue for the district, but revenue generation capacity is low. The revenue mobilisation efforts have declined since 1986. The reason for the low revenue generation capacity were attributed to unreliable revenue data base, inefficient tax administrative machinery, lack of voluntary compliance of tax obligations and general laxity in the enforcement of tan laws. It was also realised that allocation of district funds across functions ad activities are not balanced and this has created spatial disparity. There was no direct linkage between tax payment and benefits derived. The nature of the district tax structure was regressive and tax sources like basic, cattle and bicycle rates, as well as investments in commercial activities are not administratively viable. Generally, the district development efforts have had minimal impact on the socio—economic development of the district. The study further revealed that people are willing to pay higher tax rates if they are involved in the formulation of local fiscal policies. On the basis of those findings, recommendations were made to improve the tax collection machinery of the district, to involve local communities in revenue collection and to integrate planning and budgetary- processes. Other recommendations made, serve as a guide for the district to diversify into viable productive ventures, mobilise financial resources from private sources and also to enhance and sustain community self—help activities.
A thesis submitted to the Board of Postgraduate Studies, Kwame Nkrumah University of Science and Technology, Kumasi, in partial fulfilment of the requirements for the award of the Degree of Master of Science in Development Planning and Management, 1990