A Dissertation Submitted to Mzumbe University in a partial fulfillment of the requirements for the award of Master Degree of Science in Accounting and Finance.This study aimed at assessing the performance of Local Government Authorities in collection of service levy and it focused to Karatu District Council (KDC ) as a case study .The study used KDC staff, Councilors and Taxpayers in the area of the study Specifically , it aimed at identifying the sources of collecting service levy in the council ,find out whether revenues are collected from these source and examining the procedures used in collecting service levy from these sources and determine how the collected revenue is accounted for . Data was collected using questionnaires, in-depth interview and through observation Secondary data was collected from various documents of the council and other materials in library through internet services. The finding were observed to be the main problems were found was lack of tax payers education, lack of revenue registers and outdated Main Act. The collected data was analyzed using Computerized packages such as Microsoft Excel Findings was based on the objectives of the study .Conclusion was thereafter be given and the study made some recommendations include taxpayers education, maintenance of revenue registers, review of main Act to include non corporate entities in paying the service levy and on how to improve the performance of the council in collecting service levy revenue.