Question Tag: Local Governments

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  • 6 Marks

PSAF – Nov 2017 – L2 – Q1c – Public Sector Financing Initiatives

Calculate the total statutory amount to be transferred to the DACF and determine the equal share each local government would receive for the 2015 fiscal year.

The following information was produced by the Ministry of Finance for the 2015 fiscal year:

Revenue Source GH¢ million
Grants 1,130.70
Non-Tax Revenue 4,358.70
Taxes on Income and Property 9,238.30
Taxes on Domestic Goods and Services 7,061.70
International Trade Taxes 4,051.10
Other Taxes 161.40
The 1992 Constitution and the District Assemblies Common Fund Act 455 require Parliament to annually allocate portions of national revenue into the District Assemblies Common Fund (DACF) for distribution to local governments.

Required:

i) Calculate the statutory total amount to be transferred into DACF required by law and grant policy for the 2015 fiscal year. (4 marks)

ii) Assuming that Parliament approves for an equal distribution of the DACF for 2015 to all local governments, how much would one typical local government in Ghana receive as its share of the DACF for the 2015 fiscal year for development? (2 marks)

 

i) The total amount required to be transferred into the District Assemblies Common Fund (DACF) required by law for the 2015 fiscal year:

Under Article 252 of the 1992 Constitution, the DACF is to be calculated at not less than 5% of total national tax revenue. Currently, it stands at 7.5% of total national tax revenue.

Total National Tax Revenue can be calculated as:

Revenue Source GH¢ million
Taxes on Income and Property 9,238.30
Taxes on Domestic Goods and Services 7,061.70
International Trade Taxes 4,051.10
Other Taxes 161.40

Total National Tax Revenue = GH¢ 20,512.50 million

7.5% × GH¢ 20,512.50 million = GH¢ 1,538.44 million

Total Common Fund for 2015 is GH¢ 1,538.44 million.

ii) Amount of Common Fund Per MMDAs for the 2015 fiscal year:

GH¢ Million 1,538.44 = GH¢ Million 7.1224

MDAs

 

  • 4 Marks

PSAF – May 2019 – L2 – Q2d – Public sector fiscal planning and budgeting

Identify ways to improve Internally Generated Funds (IGF) of local governments.

d) You have recently been appointed as a District Chief Executive (DCE) of a particular district. It has come to your attention that the Internally Generated Funds (IGF) of the District Assembly are very low, and you intend to address the problem for the assembly.

Required:
Identify FOUR (4) ways in which the IGF of the assembly can be improved.
(4 marks)

Ways by which the Internally Generated Fund (IGF) of Local Governments can be improved include:

  • Recruitment of quality and competent revenue staff: Hiring skilled personnel to manage revenue collection processes effectively.
  • Outsourcing of revenue collections: Engaging competent commission collectors to enhance the efficiency of revenue collection.
  • Setting revenue targets: Establishing clear revenue targets for revenue collectors to drive performance.
  • Proper supervision: Ensuring effective supervision of revenue staff to prevent revenue leakages and ensure accountability.
  • Rotation of revenue staff: Rotating revenue staff to prevent collusion and complacency.
  • Accurate data collection: Collecting and updating accurate data to improve revenue forecasts and collection strategies.
  • Public education and sensitization: Educating the public on how revenue collected will benefit the community, thereby encouraging compliance.
  • Periodic valuation of taxable properties: Regularly valuing and revaluing taxable properties to ensure accurate property rate collections.
  • Motivation of revenue staff: Providing incentives, including periodic awards, to motivate revenue staff and increase productivity.
  • Introduction of electronic payment systems: Implementing electronic payment systems to make revenue collection more efficient and reduce leakages.

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