Members of Parliament have expressed dissatisfaction with the Ministry of Finance, Planning and Economic Development for failing to implement the House’s resolution to allow local governments to spend local revenue at source.
On 08 September 2021, Parliament passed a resolution urging the government to reverse the directive requiring local governments to remit all local revenues to the Consolidated Fund.
This resolution was premised on the need to strengthen the decentralisation governance to effectively improve service delivery.
While updating the House on Tuesday, 06 December 2022, the State Minister of Finance (Planning), Amos Lugoloobi said they have been constrained to allow local governments to collect and spend the local revenues collected because of the legal provisions.
“In order to implement the Parliamentary resolution, Section 29 and, other sections of the Public Finance Management Act will have to be amended to specifically allow local governments not to remit local revenues,” Lugoloobi said adding that, ‘this decision will have far-reaching effects on existing Treasury Single Account, payment processing, and reporting systems.
However, Bugiri Municipality MP Asuman Basalirwa said there is currently no legal impediment barring the Minister of Finance from allowing local governments to spend revenue at source.
“Both the Constitution and PFMA have authorised local governments to collect and use money. It is government that is violating the law because there is no legal impediment,” Basalirwa said.
Section 29 (3) (a) of the PFMA allows for revenues in the form of levies, licenses, fees and fines collected by a Vote to be retained if it is authorised through the appropriation of Parliament.
MPs urged the Minister of Finance to table an amendment intended to realign the PFMA and Local Government Act to have a seamless process of allowing local governments to spend their revenue.
“The role of decentralisation is to empower local units to live to their aspiration, but we are seeing potholes on the roads and their hands are tired because money is in the Consolidated Fund. We need to sit and amend this law to strike a balance to improve service delivery,” Muhammed Nsereko (Kampala Central MP) said.
The State Minister of Finance (General Duties), Henry Musasizi said that whereas the idea of having all government revenues put together under a single treasury account is not disputed, there is need to improve the timely accessibility of these funds by local governments through supplementary budgets.
He committed to ensuring that the supplementary budgets are cleared on time to allow local governments to expend the funds according to their budgets.