A Dissertation Submitted in Partial Fulfillment of the Requirements for the Award of the Degree of Master of Local Government Management
(MSc -LGM) of Mzumbe University
This study is about the informal sector and revenue collection in Local Government Authorities in Tanzania. The study was conducted in Mbeya region specifically in Mbarali district council. The study intended to investigate the MDC capacity to collect revenue from the informal sector. Also the study assessed the contribution of informal sector in revenue collection in three selected wards in Mbarali district council. Additionally, the study determined ways to improve the contribution of informal sector in revenue collection, and finally it assessed the role of the government policies, laws and strategies in place in facilitating revenue collection in the informal sector. The study used a case study design. Questionnaire, interview, observation and documentary review were employed to collect data. The study had a sample of 120 participants. In this study, it was found that the problems which faced revenue collection included: Poor terms of contracts for revenue collection between the MDC and private revenue collectors; Lack of transparency on issues regarding revenue collection; taxpayers resisted to pay taxes; the business areas were not improved through fees and other charges paid by taxpayers; Failure of the MDC to involve different stakeholders in public and private sector such as CSOs, and the community i.e. they were not involved in revenue collection planning. Also, it was found that entrepreneurs had small capitals. The study recommends the government to improve mechanisms for revenue collection by supporting the informal sector, specifically, introducing training programmes empowering micro-financial institutions, coordinating entrepreneurs groups and providing them with special places to conduct their businesses. .