Revenue mobilisation is one of the major functions of any Metropolitan, Municipal or District Assembly in Ghana’s system of decentralisation and local governance, and it is a basis of enduring relationship between the local governance institutions and residents in their respective jurisdictions.
It is useful, I think, that at this point we know what we mean when we say revenue. The term comes from the French word revenu, which means in, English, return. Now in the English language again, revenue refers to the income of an organisation or a company when that income is of a substantial nature.
At the beginning of every year, each Metropolitan, Municipal or District Assembly issues bills in respect of property rate charges to owners of property. In a similar manner, they issue bills to owners of businesses for annual renewal of permits to operate a business.
Besides the above there are several other types of levies and fees that Metropolitan, Municipal and District Assemblies demand for each of other permits and municipal services they provide. Then, they receive statutory funds transferred from the central Government and the District Assemblies Common Fund periodically. The focus of this write-up is on internally generated funds (IGFs) of Metropolitan, Municipal and District Assemblies.
In this post, the reader is introduced to a number of key legislations that define the mandate for revenue mobilisation and collection in Metropolitan, Municipal and District Assemblies. First, we look at the legislations that establish District Assemblies, then again identify a number of the main legal provisions that regulate revenue mobilisation collection.
Indeed, having a grasp of the legal and institutional basis of revenue mobilisation and collection is imperative for the Metropolitan, Municipal and District Chief Executives, assembly-members, finance and budget officers and their deputies, and revenue collectors.
Also it is essential that the partners in any public-private arrangements for the mobilisation of revenue are abreast of relevant legislations in the District Assembly revenue domain. The knowledge of the domain is, perhaps, a foremost imperative for the design and execution of revenue policy and strategy.
And it is very good simply for the purpose of education of ratepayers, especially large rate payers, and the general public. This way they may get to better understand their rights and obligations when dealing with any MMDA with respect to rates, permits, fees and fines.
In Ghana, Metropolitan, Municipal and District Assemblies are organisations of local government and administration, or local authority in a system of decentralisation and local governance created by law, to exercise both political and administrative authority within defined geographical areas. They are key agencies in the devolution of political and administrative power from the central government to the local level.
Metropolitan, Municipal and District Assemblies are defined and established under Chapter Twenty of The Constitution of the Republic of Ghana (1992). They are, often, collectively, called MMDAs, or the simply District Assemblies. The form and features of MMDAs are laid out by the the Constitution, and their functions, currently, are defined by the Local Governance Act, 2016 —Act 936. The functions include:
- To exercise political and administrative authority in the district;
- To promote local economic development; and
- To provide guidance, give direction to and supervise other administrative authorities in the district as may be prescribed by law.
- To exercise deliberative, legislative and executive functions.
- To be responsible for the overall development of the district;
- To formulate and execute plans, programmes and strategies for the effective mobilisation of the resources necessary for the overall development of the district.
Resource mobilisation is one of the cardinal mandates of MMDAs, as the Constitution and other legislation have given. Article 245 of the Constitution stipulates that Parliament shall, prescribe the functions of MMDAs and those functions must include that for the levying and collection of taxes, rates, duties and fees.
From this Constitutional provision, laws have been passed to further categorise the MMDAs revenues and modalities for mobilising same.
Now, Sections 144 and 145 of the Local Governance Act establish Assemblies as rating authorities and empowers them to levy sufficient rates in order to provide for their total estimated expenditures for a given period, usually annually. Under Section 137 of the same Act MMDAs are expressly authorised to charge fees for any licence they may issue. Under Section 138 of the Act, the owner or a person in possession of a commercial vehicle used within a district is obliged to obtain a licence for the vehicle from the Assembly and pay the fee required by the by-law.
There are other legislations that are relevant to revenue mobilisation function of MMDAs. The Public Financial Management Act, 2016 Act 921 (especially, Sections 47, 83—88, 96—98), and the Public Financial Management Regulations, 2019 (L.I.2378) are two very important ones. Then there are the specific revenue by-laws of individual assemblies that give detail arrangements and modalities for specific revenue items.
The annual fee-fixing resolution (duly gazetted) of each Assembly is a very useful document at the operational level: it contains the approved amounts for the public to pay as rates, fees, charges, penalties and fines.
Again, MMDAs are authorised to charge fees for any service or facility they provide or for any permit issued by or on behalf of the District Assembly. Income from the sources outlined above and others are generally termed revenues.
The revenues of District Assemblies, as mentioned earlier, generally are comprised of decentralised transfers from central government, internally generated funds, and donations and grants. Let’s explain further:
Decentralised transfers comprise funds from:
- the District Assemblies Common Fund;
- grants-in-aid from the central government; and
- any other revenue transferred from the central Government
Internally generated funds comprise funds from:
- fees and miscellaneous charges;
- investment income; and
Within the scope of IGFs in the Greater Accra Area for instance, one could find that MMDAs have enumerated in their annual fee-fixing resolutions hundreds of business types and activities, and delineated their sub-categories and their corresponding fees. Also one may find, for property rates, the various rate impost for various property classifications and rating zones.
|Basic Rate Property Rate|
|Business Operating Permits|
Vehicle Permits (Stickers)
Commercial Drivers’ License
Certificate of Habitation
Waste Collection Fees
Marriage Registration Fees
After the fees are determined, bills have to be served and the revenues have to be collected. The law again empowers MMDAs, under Section 161 of Act 936, that a Metropolitan, Municipal or District Assembly may, in writing, authorise any suitable person, to be a rate collector in respect of a specified area of a district. Three forms of engagement are usually found in the MMDAs: the Assembly’s own regular revenue staff, individual commissioned collectors and commissioned revenue collection agency in a PPP arrangement.
Finally, one has to be aware also that the law makes provision for situations where things go wrong. A few of them are enlisted as follows:
Section 140 (3) of Act 936 ‘A person required to hold a licence who fails to produce the licence for inspection on reasonable demand by any police officer or an authorised officer, commits an offence and is liable on summary conviction to a fine of not less than fifty penalty units and not more than one hundred penalty units or to a term of imprisonment of not less than one month and not more than three months or to both the fine and term of imprisonment.’
Section 159 of Act 936 ‘A person who incites any other person to refuse to pay any rate payable by that person or who assists a person to make a false statement as to the liability of the person to pay rates without lawful justification or excuse, the proof of which shall be on that person, commits an offence and is liable on summary conviction to a fine of not more than twenty five penalty units or to a term of imprisonment of not more than one month or to both the fine and term of imprisonment.’
Section 160 of Act 936 ‘A person who has not been authorised by a District Assembly and who collects or attempts to collect any rate commits an offence and is liable on summary conviction to a fine of not less than one hundred and twenty-five penalty units and not more than two hundred and fifty penalty units or to a term of imprisonment of not less than six months and not more than twelve months or to both the fine and term of imprisonment.’
At this point, it’s necessary, in conclusion, to highlight the fact that this write-up gives a broad but relevant overview of the legal mandate for revenue mobilisation and collection in Ghana’s Metropolitan, Municipal and District Assemblies. There are specific provisions for the various stages of a more elaborate revenue processes, including planning, budget preparation, method of rating properties, regulations for banking, etc., which are, for now, outside the scope of this piece. Those details will be treated in subsequent posts.
Thank you for reading this post. I hope you find it useful. You may add your comment or question in the comment box below.