Commonwealth Local Government Forum

Local government finance

Resourcing local government remains a central challenge to effective decentralisation. This section has content relating to different models of fiscal decentralisation, options for identifying new sources of local revenue, such as local property tax; and strategies for improving collection and deployment of own-source revenue. It also offers information about improving the borrowing potential of local government, innovative financing models such as municipal bonds, shared services, and public private partnerships.

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Local-level finance: improving the accountability and effectiveness of urban development programmes

This paper aims to inform future policy by providing a critical analysis of grassroots finance models. It argues for more locally centred and driven sustainable development but also considers the limitations: What are the critical challenges of participation, scale and the translation of savings into development resources? By concentrating on activities with a high degree of community leadership, this paper looks at the challenges of shaping localised arrangements to fit with structured development programming.

Author: Wayne Shand Publisher: International Institute for Environment and Development IIED Publication year: 2017


Reducing Urban Greenhouse Gas Emissions: Effective Steering Strategies for City Governments

In the IMFG Perspectives Paper (No. 16), Reducing Urban Greenhouse Gas Emissions: Effective Steering Strategies for City Governments, Sara Hughes reviews the unique strategies of three cities leading the charge: Toronto, New York City, and Los Angeles. The paper identifies three strategies that have proven effective: Building and maintaining a broad-based coalition of governmental and non-governmental actors working toward a common goal; Investing in capacity-building, data collection, and education; and Embedding new ideas, financial tools, and standards into local formal and informal decision-making institutions. “Cities are critical climate change actors, and will be for the foreseeable future,” says Hughes. “Given the jurisdictional and financial constraints local governments face, their climate change goals will demand creative partnerships, new tools and systems, and innovative institutional cultures.” This paper is part of a series of IMFG publications and events focusing on cities and climate change.

Author: Sara Hughes Publisher: Institute of Municipal Finance and Governance, University of Torronto Publication year: 2017


Revenue mobilization and management in sectors

The report that follows begins with a background chapter, contributed by our expert looking at
the political economy of revenue raising in line ministries. Working with the GIZ, we engaged
four countries to contribute case studies, using user fees and charges as the revenue source for
examination. The purpose of fees and charges varies from cost recovery to attempts at changing
behavior. For example, the Serbian chapter deals with charges that are aimed at implementing the
‘polluter pays’ principle to reduce types of commercial waste and increase recycling. The political
economy of charges suggests that the public in formerly planned economies may be suspicious
of their imposition, fearing that they will not be matched by any reduction in overall taxation levels.
As well as making it difficult to increase charges as circumstances change, this suspicion
requires politicians to be transparent about how tariffs are set if reasonable collection rates are to
be achieved. Much may depend on the nature of the good or service being provided and how the
public perceives it. Case studies are compareed from Albania, Serbia, Moldova and Germany.

Author: Tamara Simiæ Publisher: Centre of Excellence in Finance Publication year: 2017


The Mobilisation of Sub-National Revenues Is a Decisive Factor in the Realisation of the 2030 Agenda

2015 the global community committed itself to an ambitious programme of reform. Achieving the Sustainable Development Goals and implementing the resolutions of the Paris climate conference require that great efforts are made – including those of a financial nature. Many states will have to ensure that untapped or barely used sources of income are developed. Sub-national units such as provinces, departments, districts, and cities will play an increasing role in the mobilisation of public revenues. They are also in the forefront with regard to realisation of the global reform agenda, as many of the objectives concern classic areas of activity of local government: schools, basic medical care, local road construction, public transport, construction of social housing, the supply of drinking water and disposal of waste water, refuse collection etc. These services are already the responsibility or co-responsibility of subnational units. The mobilisation of revenues at sub-national level is therefore not only a financial necessity, it is also prudent from a development policy perspective: if the users and funders of a good match, there is a greater likelihood that the preferences of citizens will be observed and the use of funds monitored. In addition, local taxes and levies are often paid by a broad circle of citizens and companies. This serves to strengthen the relationship between governments and the governed. One thing should be clear in this: although many countries will exploit the scope for collecting local taxes and levies in the future, this potential is nevertheless limited. Many sub-national units will remain dependent on transfer payments from the central state. Cities, districts and the middle tier cannot solve the funding problem of the states on their own. However, they can help to place the provision of public services on a broader foundation of legitimacy and, in co-operation with the national level – for example via the exchange of information – improve fiscal policy as a whole. Consequently, they also contribute to overcoming problems of fragile statehood.

Author: Christian von Haldenwang and Armin von Schiller Publisher: German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE) Publication year: 2017


Mining in Africa : Are Local Communities Better Off?

his study focuses on the local and regional impact of large-scale gold mining in Africa in the context of a mineral boom in the region since 2000. It contributes to filling a gap in the literature on the welfare effects of mineral resources, which, until now, has concentrated more on the national or macroeconomic impacts. Economists have long been intrigued by the paradox that a rich endowment of natural resources may retard economic performance, particularly in the case of mineral-exporting developing countries. Studies of this phenomenon, known as the “resource curse,” examine the economy-wide consequences of mineral exports. Africa’s resource boom has lifted growth, but has been less successful in improving people’s welfare. Yet much of the focus in academic and policy circles has been on appropriate management of the macro-fiscal and governance risks that have historically undermined development outcomes. This study focuses instead on the fortune of local communities where resources are located. It aims to better inform public policy and corporate behavior on the welfare of communities in Africa in which the extraction of resources takes place.

Author: Punam Chuhan-Pole, Andrew L Dabalen, Bryan Christopher Land Publisher: World Bank Publication year: 2017


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