Abstract

The transfer of property tax and billboard fees collection from Local Government Authorities (LGAs) to Tanzania Revenue Authority (TRA) has had drastic consequences for LGAs budgets. This study seeks to examine the effects of shifting the collection of non-tax revenue from LGAs to TRA with reference to Morogoro Municipal Council (MMC). A questionnaire was administered to a sample size of 88 respondents, purposefully selected from Morogoro municipality and TRA. Key staffs were interviewed to complement the survey data. A  descriptive analysis of survey data coupled with content analysis of interview data, showed that, non-tax revenue shift from MMC to TRA had various effects that include its inability to fulfil its obligations, loss of jobs to workers who dealt with revenue collection and introduction of other alternative taxes (for instance, waste disposal tax) that added burdens to tax payers. Moreover, MMC level of average annual revenue collection decreased by TZS 239 million from billboard fees and TZS 567 million on property tax respectively, for the three years of 2017 to 2019. Consequently, MMC was not able to fulfill its obligations effectively. It was also found that lack of competent personnel, resulted in poor administrative capacity to broaden the revenue base, tax evasion among municipal dwellers, poor tax enforcement capacity.  Other challenges are: corruption from revenue collectors, political interference causing relaxation on revenue collection and overdependence on central government which reduced MMC’s autonomy. It is recommended that MMC needs to enhance its internal revenue collection system in order to be able to fulfil its obligations while encouraging voluntary compliance in payment of revenue. MMC could also adopt the techniques used by TRA in broadening its tax base.

Key words: Non tax revenue, local government authorities, Tanzania revenue authority.