Revenue Generation in Local Government Councils in Nigeria Essay

Local governments are potentially very important for Nigeria as they play a significant role in generating revenue and encouraging civil involvement, as well as creating a visible link between taxes and service delivery. The increasing cost of running government coupled with dwindling revenue has left various local governments in Nigeria with formulating strategies to improve the revenue base. Despite the numerous sources of revenue available to the various tiers of government as specified in the Nigeria 1999 constitution, since the 1970s till now, over 80% of the annual revenue of the three tiers of government comes from petroleum. However, the serious decline in the price of oil in recent years has led to a decrease in the funds available for distribution to the states and local governments. The need for state and local governments to generate adequate revenue from internal sources has therefore become a matter of extreme urgency and importance. The need underscores the eagerness on the part of state and local governments and even the federal government to look for new sources of revenue or to become aggressive and innovative in the mode of collecting revenue from existing sources. The general concern over the seemingly slow development of the rural areas in Nigeria has created a doubt as to the relevance of local governments in Nigeria whose primary function was to effect a representative government faster to all areas of the state land. Inadequacy of funds for various developmental projects stands as the cause for these shortcomings despite the increasing revenue allocation from the Federation accounts to the local governments. Hence the reason for the various avenues granted the local governments to generate revenues themselves. This essay is being carried out to appraise and evaluate revenue generation in the local governments, particularly the internally generated revenue (IGR) to point out its adequacies, inadequacies and give recommendations where necessary. It study seeks to:- * Identify the various sources of internal revenue available to local government council; * To examine the prospect of improving the internally generated revenue of local government council; * Spotting of factors militating against effective revenue collection in the local government; and * Proffer solution to identified problems. Good governance is good money. Revenue generation can play a significant role in improving local government efficiency and reducing local government dependency. This essay would provide positive suggestion on how to improve the financial position of the local government councils. Secondly, it will provide useful suggestions on how to effectively manage problems of revenue generation. Thirdly, it will provide useful suggestions on the budgetary control system the council can embark upon. Lastly, this work will help researchers, individuals, organizations, higher levels of government and also local government councils on how to enable them meet their obligations. The theory of public finance is a field of economics that is concerned with paying for collective or governmental activities, and with the administration and design of those activities. The proper role of government provides a starting point for the analysis of public finance. In this view, public sector programs should be designed to maximise social benefits minus costs, then revenues needed to pay for those expenditures should be raised through a taxation system that creates the fewest efficiency losses caused by distortion of economic activity as possible. In the light of the above, the focus of this essay is on revenue generation in local government councils with particular reference to Ikenne local government, Ikenne. This work will embrace an examination of the internal and statutory source to the total revenue. This work was intended to cover all the twenty (20) local government in Ogun State, but because of limited time frame and the unavailability of some records due to negl igence on the side of the staff, the focus will be on Ikenne Local Government only. This work will begin with the intention of developing an initial understanding of the opportunities and potential for revenue generation. To do this, the revenue generation constraints faced by local governments, perceptions of local governments, the importance of revenue, various revenue generation and service delivery will be appraised. This study will attract data from both primary and secondary sources. The data from primary sources will include those obtained from personal interviews. Secondary data would be obtained from budget speeches of council chairman, existing records in the council, journals, and CBN annual financial publications.