43 Pages

Part 2

Mobilising More Money

This chapter looks at tax issues in general and points to particular issues about the exploitation of the main types of local tax. This is not the place to provide an exhaustive catalogue of local taxes, but two common forms of local taxation –property tax (PT) and business or service taxes – offer relevant examples. The former is the most widespread form of local taxation in the world, although its importance, and the way in which it is levied, vary widely. The latter appears in many guises throughout the world, its main feature being the tapping of mercantile activity or wealth through taxing businesses, whether on turnover, size or profit – or simply through flat-rate licences. A third category of local taxation, that on incomes, is common in developed and transitional countries, often through sharing or surcharging on national income tax. But it is rare in developing countries, mainly because of the relatively small size of formal sector employment outside the capital city. One exception is Uganda, where a graduated personal tax on assessed income has long been the mainstay of local government, although even here revenues from that source appear to be in terminal decline.