Every responsive political system in the world has been concerned about local government. This is due to the fact that local government entails the participation of ordinary citizens. in providing social and economic services to the community
areas. It is founded on the idea that local issues and concerns may be solved locally.
The inhabitants in the neighbourhood will be able to better understand the needs.
then either the federal or state governments (Arowolo, 2008:4).
In Nigeria, the sources of local government finance imply the following:
local government generates revenue in a variety of ways they have the financial resources to satisfy their financial obligations in the future
in the course of carrying out their constitutional responsibilities and activities
as stated in section 7 (1) of the federal constitution of 1999 Nigeria is a country in Africa.
There are two major sources of local government finance in Nigeria, namely
- internally generated revenue, and
- externally generated
INTERNALLY GENERATED REVENUE
The internally generated revenue is revenue created by the company itself.
It is part of the administration of local government.
- a local or community tax,
- a poll tax, or User fees,
- tenement rates, and a loan
- Local license, fines and fees
- Earnings from a commercial undertaking
- Rent on local government property
- Interest payment
The degree to which Each locality’s money is generated internally.
The size of the local government is determined by the size of the local government.
The nature of the commercial activity, the government sector, and the urban environment are all factors to consider.
or the council’s rural nature, the rate to be charged, instruments used in revenue collecting, as well as the citizens’ socio-cultural attitudes toward the taxation issue (Anifowose and Enemuo, 1999).
EXTERNALLY GENERATED REVENUE
The term “externally generated revenue” refers to revenue that is created outside of the country.
monies raised by the government from sources other than the local government
Legislative allocation, for example, is a part of the government.
federal, state, and other sources of grants and loans as stipulated in the federal constitution of 1999
Section 7(6a – b) of the Nigerian Constitution
Ensure that the federal and state governments are legally obligated to fund local government. for the sake of development and good administration
As a result of their improved governance, their revenue base has grown.
The significance of finance in local governance achievable with the creation of a reasonable annual budget The importance of the budget is underlined. The resources are organized in a
The council is able to provide socio-economic services by monitoring terms.
providing services to the residents of the region at a reasonable cost
commonplace (Ogbonna D. 2013).
The different ways in which The following is a list of what local government funds are used for:
Roads are being built, water is being provided, and clinics are being built.
and the provision of health-related services such as medications, as well as the provision of
electricity, market stall construction, and motor pack
community assistance, claim and salary processing, and other services
purposes (section 7 (2) of Nigeria’s 1999 constitution).
TRANSFERS BETWEEN GOVERNMENTS
State government transfers (including indirect federal funding) provided around 32% of general revenue to local governments, while the federal government provided 4% directly.
Over two-thirds of state government transfers to local governments go to education initiatives. In the meantime, housing-program disbursements account for almost 40% of all federal transfers to local governments.
Property taxes brought in $509 billion to local governments in 2017, accounting for 30% of total revenue. This was the single largest source of tax revenue for the municipalities.
Local governments received $124 billion in sales taxes (general and selected), accounting for 7% of total revenue, and $33 billion in individual income taxes (2 per cent).
Other taxes brought in $40 billion, including corporate income taxes, hotel taxes, and business license fees (2 per cent).
Municipal and county governments collected $385 billion in charges and other fees, such as water, sewerage, and parking meter costs (23 per cent of local general revenue).
Since 1977, the percentage of municipal general revenue derived from taxes has been consistent at around 40%. The composition of tax revenue, on the other hand, has shifted slightly.
Property taxes’ proportion to general revenue fell from 34% in 1977 to 30% in 1979, then to 27% in 2000, before returning to 30% in recent years.
In the meantime, sales tax income continuously climbed from 5% to 7% between 1977 and 2017. (figure 2).
Intergovernmental transfers’ share of general revenue has similarly changed over time, falling from 43 per cent in 1977 to 36 per cent in 2017.
Charges, fees, and other miscellaneous revenue climbed from 15% to 23% in 1985 and has been relatively constant since then (figure 2).