A Thesis Submitted in Partial Fulfillment of the Requirements for the Award of the Degree of Masters of Science in Accounting and Finance of Mzumbe University.The study set out to evaluate the factors obstructing Local Government Authorities from achieving estimated revenue collection goals. Specifically the study aimed at identifying the economic activities undertaken in the LGAs and to evaluate the relationship between the identified economic activities and LGAs’ major own revenue sources, evaluating LGAs’ own source revenue collection methods, evaluate the trend of LGAs’ actual revenue collections in past four years and pointing out the factors behind LGAs’ failure to meet their estimates in actual revenue collections. The research design used was the case study taking into account the Arusha City Council (ACC). The sample size of 20 respondents was used while the sampling procedure applied was purposive sampling technique. Both primary and secondary data were obtained through questionnaires and interview for primary data and documentary review for secondary data. The data processing was done using the Statistical Package for Social Science (SPSS), while data analysis was been undertaken using both Descriptive Statistics and Inferential Analysis. Findings of the study revealed some of the economic activities undertaken in ACC to be Business activities comprised of large scale businesses, medium businesses and petty businesses, Tourism activities such as tour guiding, tourism hotels and tourism transportation. The some of the major sources of revenue of ACC were Service levy, Market levy, Guest house levy and Hotel levy, Public parking fees and Posters and billboards fee, where by two methods which are own council revenue collectors and outsourcing were in use. Also, the findings of the study concluded that Central Government's directives, weak and unbinding contracts given to revenue collecting agents to be some of the factors causing low revenue collections by LGAs. And finally the researcher recommended that, PMO-RALG to assist LGAs to have Taxpayers data base and as soon as possible to approve the draft by-laws submitted by LGAs. LGAs are argued to prepare bounding contracts to their revenue collecting contractors to minimise losses resulting from contractors default while the Central Government should respect LGAs’ autonomy.