Effects of Revenue Collection Challenges on Service Delivery of Local Government Authorities in Tanzania:

Abstract

This study investigates the challenges of revenue collection faced by Arusha City Council and their implications for service delivery efficiency and effectiveness. The study applied a mixed method research approach hrough a combination of surveys and key informant interviews. The study involved a sample size of 91 respondents who were revenue collectors working at Arusha City Council. Data were analyzed through descriptive statistics and content analysis. Findings from the study reveal that Arusha City Council grapples with diverse challenges that hinder its capacity to collect revenues from its own sources. Taxpayer-related challenges include unwillingness to pay taxes, limited tax education, perceived unfairness of tax rates, participation in the informal economy, and instances of corruption. Institutional challenges encompass a shortage of qualified revenue collectors, the use of harsh revenue collection methods, weak enforcement of revenue collection laws, low utilization of local government revenue collection information systems, and political interference in revenue collection. Furthermore, the study highlights that these revenue collection challenges have a direct and detrimental impact on the efficiency and effectiveness of service delivery at Arusha City Council. Delays in service delivery, project completion delays, increased service delivery costs, facility and human resource shortages, delayed response to citizen issues, decreased service quality, and declining citizen satisfaction are among the consequences of these challenges. In response to the identified challenges, the study proposes several strategies for revenue collection improvement, including enhancing internal control systems, providing taxpayer education, increasing the number of qualified revenue collectors, conducting feasibility studies to identify new revenue sources, and reviewing the performance of revenue collectors. Encouragingly, respondents generally expressed agreement with these strategies, suggesting potential for their successful implementation. In conclusion, this study underscores the complexity of revenue collection challenges and their tangible impact on service delivery in Arusha City Council. The findings provide valuable insights for policymakers and local government officials seeking to address these challenges and enhance service delivery. To ensure effective revenue collection and efficient service provision, future efforts should focus on policy reforms, taxpayer education, institutional capacity building, and transparency measures.