Outsourcing or Giving all Out? Experience from Tanzania Local Government Revenue Collection

Abstract

Outsourcing revenue collection in Local Government Authorities  has been adopted as a mechanism to solve the previous problems of revenue collection which resulted into loss and missmanagement of the whole process. One of the expectations was to increase revenue collection which will  provide a room for fiscal autonomy. However, experience from few local government authorities which have outsourced their revenue collection shows that, the whole process of outsourcing has not yielded the expected outcome especially on enabling local authorities to have fiscal autonomy instead it has turned to benefit the private agent who collect Tax. By using secondary data this paper attempts to show how the process of outsourcing is benefiting the private agent and therefore it is like giving everything out. It concludes that, though outsourcing seems to benefit local authorities by reducing some tasks especially on tax collection, outsorcing benefits much a private agent and therefore quick meausures should be adopted including building the capacity of Local Authorities in identifying the sources of revenue and  in estimating the actual collections so as to have clear picture of how much will be generated by the agent and what should be the appropriate amount to be submitted to the Local authority.