REVENUE GENERATION IN LOCAL GOVERNMENT AREAS: PROBLEMS AND PROSPECT

ABSTRACT

The adverse situation in the various local government areas of Nigeria has led the researcher to go into this very topic.  Hence the purpose of this  work is to enlighten people  mostly students in the school of financial studies on how revenue is generated in local government problems confronting them as regards revenue generation as well as prospects to the problems.

          However local government is expects to use the funds generated in embarking on income earning projects; projects that come under fee or bill charging utilities like portable water electricity construction of market squares.

          However before fund can be generated one must make ways of getting this funds like grants given to local government for some purpose by the federal government.  The central government also determines the source extent purpose and maximum dilation for which borrowing is to embark upon by the local government and not just going ahead to borrow.

          Local government raise loans to purchase plants and equipment as well as other projects whose costs are too great for them to embark on at a time.

          Furthermore local authorities in Nigeria re responsible for the establishment and maintenance of public motor parks bad roads market squares etc.

          It is therefore recommendation for students in the school of financial studies at all level (who will be opportune to  lay hands on this write up) as a ground for the much needed funds internally generated revenue to facilitate projects execution by local government.

TABLE OF CONTENT

Title page                                                                                          i

Approval page                                                                                  ii

Dedication                                                                                         iii

Acknowledgment                                                                              iv

Abstract                                                                                            v

Table of contents                                                                              vii

Chapter One

Introduction                                                                                      1

1.1            Statement of problem                                                              1

1.2            Rationale of the study                                                             2

1.3            Significance of the study                                                                   2

1.4            Definition of terms                                                                            3

Chapter two:

2.1            Constitutional provision for local government source of revenue6

2.1.1    External Sources                                                                     7

2.1.2    Internal sources                                                                       10

Chapter three

3.1            Statement of hypothesis                                                          13

3.2            Methodology of the study                                                       14

3.3            Sources of data                                                                        15

Chapter four

4.1            Data presentation                                                                    16

4.2            Analysis of data                                                                      18

Chapter five

5.1            Summary of finding                                                                25

5.2            Conclusion                                                                              28

5.3            Recommendation                                                                     28

Bibliography                                                                           31

CHAPTER ONE

INTRODUCTION

1.1     STATEMENT OF PROBLEM

          Local government council as third and last tier of government is faced with this primary function of bringing as close as possible the impact of government to people of a particular locality.  Impacts such as government regulatory policies government protected service   government development projects e.g. road net work hospitals school markets pipe borne water etc.

          This primary function of the local government has in recent times faced a lot   of set back due to   insufficient revenue emaciating from the councils liability to generate (internal) revenue from the local dwellers.  This problem cannot be over- emphasis as it has become a major concern to both he state and federal government   

          In relation to the above stated problem the researcher will be investigating on why and how this problem can be tackled for be tackled for better efficiency of the local government.

1.2     RATIONALE OF THE STUDY

          This study “Revenue generation in local government Areas is considered necessary for various essential reasons.  As a matter of fact since we all know that development of any area depends on the revenue generated.  This revenue generation in local government area enables the area to carry out some development project such as electricity water and road construction project etc.

1.3     SIGNIFICANCE OF THE STUDY

          The inhabitants of the various local government areas of the nation (NIGERIA) will have the course to enjoy the affirmative results to certain extent of all or part of these problems to re3venue generation in local government are properly tackled.  Hence such myriad of problem of revenue generation which also gives rise to untold hardship will generally be under control or a thing of the past.

          This will become a tool for most local government area to a speedy set-up of some strategies which will enable them to generate their revenue easily and as well as executing their project effectively.  This study will be of paramount significance to the society mostly to those students in school of financial studies (banking & finance) who are making or intending to carry out research in the problems that confront most local government in Nigeria on revenue generation.

          This will also give potential market men and women as well as other residence of various local government areas to comply with their respective local government councils as regards payment of tax rates charges etc.

          Finally it will enable the researcher to have an in-depth knowledge of the study.  Therefore the significance of this study is by no virtue exhaustive.

1.4     DEFINITION OF TERMS

·                    TAXATION: This is one of the ways local government generation revenue.  It is a compulsory levy imposed by the local government on most of the entire members of the society who are capable of paying tax or who are expected to pay tax.

·                    PERSONAL INCOME:  This is a form of direct tax which is levied on the wages salaries and other earnings of individuals.  In assessing this kind of tax certain allowances (wife children dependent relative allowance etc) are deducted this balance is then taxed to determine this amount to be paid as tax.

·                    LOAN:  loan can be described as financial aid with interest payable.  Sometimes local government borrow money in from of loans from other bodies like: bank, state government federal (if possible) etc to enable them execute their project when they are in short of fund.  However this loan is payable at a given interest rate over a specified period of time.

·                    RENT & ROYALTY:  these re payment made to the  local  government body by hose who make use of local government  properties such as : Land, building e.t.c

·                    GRANTS: Grants are said to be financial aids without interest.  This implies that grants are forms of gift   granted to local government by a body (federal state or any other body without paying back.

·                    CHARGE FINES & FEES: These are among the means of generating revenue by the local government they are payments made to local government by those who indulge in one commercial activity or the other.  Such fees are: motor licensee fees road /bridge tolls market fees e.t.c 

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