Relationship Between Revenue Mobilization and Performance of Local Authorities in Kenya

Abstract

Local revenues are defined as subtotal of all categories collected from a number of sources like market dues, fines and penalties and parking fees.Revenue receipts are divided into tax revenue and non-tax revenue which include among others taxes on properties. Business revenue is income from activities that are ordinary for a particular corporation, company, partnership, or sole-proprietorship.The public sector entities, including the counties Government appraise their legal status as the providers of the public services and account for the public funds entrusted to them, but also to raise sizeable amount from their own sources to support in the delivery of the public services. The research objective of the study was to determine the relationship between revenuemobilization and service delivery in local authorities in Kenya. This research adopted a descriptive research design.The target population of this study was175 local authorities.The sample size of the study was 35local authorities selected using purposive sampling.The study was based on secondary data on revenue collection and service delivery of the local authorities. The study considered performance ranking for 10 years since the inception of performance contracting ranking in Kenya.The inferential statistic multiple regression and correlation was carried out to determine the relationship between revenue mobilization and performance.The study established that there had been increase in revenue mobilization in the local authorities. The higher the level of mobilized Revenue the better the performance of local authorities, It was also established that the Local authorities with low levels of mobilized Revenue performed dismally/poorly.The study concludes that local authorities budgeting greatly influence revenue mobilization.The use of the budget to control local authorities‘ funds and guard against over or under expenditure would be a critical element in management.The study concluded that increased in central government transfer fund such as LATF from the central government led to increase in efficiency service delivery.In light of the findings and the need for local revenue mobilization to provide services in local authorities since transfers from the central government were only to support the budget of the local government to enable efficiency delivery of public services. Therefore a lot of effort should be put in to ensure that local revenue collection and administration is improved in local government to fully provide quality service efficiently to the people.The study recommend that revenue collection in local government should be privatized by giving out tenders to individuals or companies to collect revenues on behalf of local government to reduce the increasing rate of tax defaulters and constituting enforcement teams to check businesses that have failed to pay taxes and penalize them accordingly to increased revenue mobilization.