Considering the facts that the sustainability of service delivery is hinged on own revenue mobilisation,
the untimely disbursement of central government transfers and the expected discontinuity in the disbursements of donor funds
in the medium to long term, local councils are faced with enormous challenges to enhance their revenue potential to improve
service delivery at the local level. For councils to be aware of what their obligations are in revenue mobilisation and collections
and the methods they must take to maximise revenue collection, the following methods should be adopted for the medium term.
Local Tax and Market Dues • Get an idea of all eligible local tax payers through survey or census reports
• Local councils engage chiefdom authorities to negotiate workable collection and sharing arrangements
Property Rates • Establish proper valuation zones • Update valuation rolls (property census) • Establish
record on all properties that has changed use (comm./residential) • Initially adopt simple valuation methods • Train
valuation specialists in the medium term.
Licenses and Fees and Charges • Ministry of Finance, Ministry
of Local Government and Community Development, Law Officers Department to harmonize policy and legal instrument relating to
revenue assignment.
Revenue Sources The resources at the disposal of the local councils are their own revenue sources and grant for administrative
expenses. All other grants to councils (grants for devolved functions and the Local Government Development Grant) (LGDG) are
tied to the implementation of specific activities. Grants for devolved functions relates to the Statutory Instrument which
clearly map out Ministries, Departments and Agencies (MDAs) commitments to devolve functions to the local councils for the
transition period 2004-2008. Implementation of activities using the LGDG is tied to local council’s development plans.
3.1 Own Revenue Sources The most important and lucrative sources of local councils’ revenues are:
1) Precept from local tax 2) Property tax 3) Licences 4) Fees and charges (market dues) and 5) Mining revenues
There is a sharing formula designed by the Ministry of Local Government and Community Development between
the local councils and chiefdom councils for three of the above revenue sources. a) Local Tax • Local
tax in Sierra Leone is a tax per head on selected individuals (poll tax) • The Government sets the tax base and
the legal basis is the Local Tax Act • The LGA 2004 says every person liable should pay local tax •
Liability is defined in the Local Tax Act 1975 as all adult males age 21 years and above in a council’s area who are
in receipt of any income, and are ordinary resident in the area • The tax rate is set by local councils but collected
by chiefdom councils • The current sharing formula is 60 percent in favour of chiefdom councils – This could
be different in other councils
b) Property Rates • The legal basis is the LGA 2004
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• The LGA 2004 states the definition of property as all buildings within a council’s locality • The tax
is payable on the ‘assessed annual value’ of all buildings. • The Act, in section 70, gives a
list of those properties that are exempt from property rates. These are: any church, chapel, mosque, meeting-house or
other building exclusively used for public religious worship; buildings used for public hospitals and clinics; buildings used
for charitable purposes; buildings used for public educational purposes, including public universities, colleges and schools;
buildings on burial grounds and crematoria; and buildings owned by diplomatic missions as may be approved by the Ministry
responsible for foreign affairs.
c) Licences • Section 56 of the LGA 2004 states that councils
SHALL issue a license to any person who: establishes or maintains premises from which to carry on any business; owns a cart,
wagon or other non-motorised vehicle or canoe; or holds any concert, dance, musical, theatrical or other entertainment.
d) Fees and Charges • The LGA 2004 states that local councils shall charge fees for: the use of markets;
the use of bus, taxi, car or lorry parks; the extraction of fish; the extraction of timber, sand and other building materials;
and services provided by the council. • Some fees councils could charge include, but are not limited to: hire of the
town hall; hire of recreation grounds; rent of council property; jetty/landing fees; cemetery/burial fees; lorry park fees;
slaughter house fees; market store rent etc. • A major component of fees and charges, which has proved to be one very
lucrative source of revenue for local councils, is market dues.
Market Dues • This is charge
levied on persons selling in councils jurisdiction • The Act states that councils shall charge fees for the use
of markets • Collection of this fee is done by the chiefdom administration for the district councils and revenue
collectors for the urban councils • The sharing formula is 80 percent in favour of the chiefdom councils. •
Market due for the urban councils and the Western Area Rural District Council is not shared.
e) Mining
Royalties The sharing formula for this source is as follows: Mining surface rent from small-scale miners - 80 percent in favour
of chiefdom councils Mining surface rent from large-scale miners • 40 percent to land owning families •
20 percent to chiefdoms • 20 percent to Paramount Chief • 20 percent to councils
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Community Development Fund (0.75%) - 80 percent in favour of chiefdom councils4
3.2 Transfers to
Local Councils There are basically three broad types of transfers: Administrative Grants, Grants for Devolved Functions and
the Local Government Development Grant (LGDG). The first two are provided for in the LGA2004 and are financed solely by the
central government. The LGDG is co-financed by government of Sierra Leone and donors mainly the World Bank and DFID.
3.2.1 Administrative Grant Government do provide administrative grant to help local councils defray
some of their administrative expenses, considering that many of them are newly established councils and are learning to mobilize
local revenue. The administrative grants are to be used to finance administrative and supervision activities related to performing
local council functions. It is NOT meant to cover only the allowances of councillors.
3.2.2 Grants
for Devolved Functions Section 46(2) of the Local Government Act 2004 provides that there shall be paid to local councils,
transfers in the form of tied grants for each devolved function, in an amount that is at least necessary to continue the operation
and maintenance of the devolved function at its pre-devolution level. In accordance with the Statutory Instrument of November
2004, more functions have been devolved to Local Councils in 2006 in addition to the functions devolved in 2005. Thus the
total resource envelope has increased significantly (see chart below).
3.2.3 Local Government Development
Grant (LGDG) This grant is intended to help councils undertake development projects in their localities. This grant is not
specific to any sectors and allows discretionary decisions of councils to undertake development projects that meet priority
needs of their localities. The LGDG Operations Manual specifies a range of projects for which this grant is applicable or
not.
This grant program has a Revenue Effort component, access to which is conditional on a council contributing
50 percent of the cost of an additional proposed project. For instance, if Council A is entitled to Le50 million (US$16,700)
of the Revenue Effort Grant, then it can propose a project whose total cost does not exceed Le100 million (US$33,400) provided
that it can provide convincing evidence that it can finance 50 percent of the cost of the project in question. However, funds
allocated per councils will be reverted to a common pool where any council can access it, if councils cannot match their allocation
by July of every year5.
The mandate for the Freetown Development Plan emanates from the Local Government Act 2004. A whole chapter in the act,
captioned ‘Part XI - Development Planning’, is devoted to this as follows:
(1) A local council
shall cause to be prepared a development plan, which shall guide the development of the locality. (2) The draft of a development
plan shall be made publicly available. (3) A development plan shall form the basis for the preparation of the budget of a
local council. (4) A local council shall, before approving or reviewing a development plan, consult residents of the locality,
agencies of Government and non-governmental and international organizations that have interest in working in the locality.
(5) The Ministry responsible for development and economic planning shall issue guidelines for the preparation of development
plans. 86. For the purposes of subsection (1) of section 85, a local council shall appoint a Local Technical Planning Committee,
which shall consist of (a) the Local Council Chief Administrator who shall chair the Committee; (b) Heads of relevant
Departments of the local council; and (c) Any technical person co-opted by the Local Council Chief Administrator. 87. A local
council shall review its development plan as and when necessary. 88. A copy of the approved development plan shall be made
available at the office of the local council and in a conspicuous place in every Ward, immediately after approval. 89. A development
plan prepared and approved by a local council shall not be incompatible with any national development plan adopted by the
Government.