In 2018, all the 22 Local Councils were in cash irregularities on activities amounting to Le18.5 billion, ranging from revenue arrears, statutory deductions not made, unsupported payments, unapproved expenditure and sitting fees and other allowances paid to absentee councillors. According to the Auditor General, Local councils are required to make adequate efforts to collect revenues from their own-sources. This requirement was not met by some Local Councils during 2018. During the audit team’s review of revenue generations by selected councils, they observed that revenue arrears for three councils totalled Le15.8 billion (Le15,782,182,623).
Contrary to sections 25(1, 2, 3) and 27(1) of the NASSIT Act of 2001, it was also noted that some councils failed to remit a total amount of Le368 million (Le368,820,879.00) being social security contributions to NASSIT.
Similarly, they identified that withholding taxes which totalled Le209 million (Le209,122,352.46), and PAYE tax of Le7,343,774.00 were either not deducted, or deducted but not paid to the NRA as specified in the Income Tax Act of 2000. Under section 130 (1) of the Income Tax Act of 2004 as amended in 2008, the councils are obligated to pay any tax that has been withheld or should have been withheld to the NRA within 15 days of the end of the month in which it was or should have been withheld.
The Auditors also discovered, unsupported payments of Le865,744,736, unapproved expenditure of Le826 million (Le826,135,726) and Le460 million (Le460,930,000) being amount paid as Sitting fees and other allowances paid to absentee Councillors.
The Auditor General’s team further analysed the figures for own-source revenue (Tax, Non-Tax and Other Revenues) disclosed in the financial statements submitted by the 22 Local Councils and observed that during 2018, the councils were unable to collect 49% (Le32,512,996,630.00) of the total own-source revenue budgeted amount of Le66,305,882,664.
These uncollected revenues comprised mainly of local taxes, property rates and business registration certificates. Most councils generally did not have database to guide collection, and also did not devise effective revenue collection strategies to compel payments. The Auditor General however commended efforts made by eight councils in enforcing revenue collection. These councils were able to collect over 50% of their budgeted own-source revenue during 2018.
Five of the eight councils were outstanding as they were able to collect over 80% of their budgeted own-source revenue. This lapse arose as a result of ineffective supervision on the part of the Budget and Finance Committees to perform their functions as required in the Local Government Act of 2004.
It was her recommendation that councils should strengthen monitoring over collection of revenue. “We advised that the councils increase their efforts to enhance the own-source revenues, in order to be able to fund those critical service delivery areas that will increase the wellbeing and livelihood of the localities in which they operate. We further recommended that the councils should engage their Budget and Finance Committees to devise effective strategies to track and collect all revenue from local taxes, property rates, businesses and other potential revenue streams.”
By Zainab Iyamide Joaque