Challenges of Municipal Government in Revenue Collection Performance: Case of Shambu Town, Oromia National regional State, Ethiopia (2014/15-2017/18)

Abstract

In Ethiopia, fiscal decentralization to municipal governments has been regarded as viable in revenue rising in order to improve the service delivery and enhance development at both local and national level. However, as some literature reveal, municipal governments are incapable for accomplishing its responsibilities in effective and efficient manner. Hence, this study meant to assess the challenges of municipal government in revenue collection performance of Shambu town, Horro Guduru Wollega, Oromia National Regional State Government. In doing so, it considers the efficiency of revenue collection performance of municipality accompanied with some selected good governance of public financial principles: participation, transparency, and accountability. The study design was descriptive case study with mixed research approach. For sampling technique, probability (Stratified Random Sampling) and non probability (purposive sampling) were applied, and sample size was determined using Slovenes’ (1995) formula by which 282 tax payers were selected as respondents. Data collected from primary and secondary sources. Data collected by survey questionnaires were analyzed by SPSS version 20 and data collected by focus group discussions and interviews were analyzed using description and used for the purpose of triangulation. This study found that the municipality was not efficient in its revenue collection performance. In view of that,  the main defy for such inefficiency are : poor  fiscal cadastre; lack of skilled human power in revenue collection; poor administrative capacity; lack of providing awareness about tax for  taxpayers; lack of service charge rate computation methodology; using manual registration and records and  poor governance public financial principle practices (ill ground of transparency, participation, and accountability).

Keywords: Revenue Collection, Good governance public financial principles, Efficiency and Effectiveness