There is already growing literature that intergovernmental fiscal relation in developing countries is not effective because the governments in those countries assign more functions than resources they transfer to lower levels of government. The general conclusion given is that sub-national governments need to be given access to adequate resources to do the job with which they are entrusted and there is little emphasis on the mechanism for accountability on the expenditure of those resources and the power of social rules in place.The resources may be inadequate because they are not spent well or because of corruption.
Thank you researcher for raising the issue. I think the main problem is structural anomalies and unstable government followed by lacking of suitable policy. Due to unstable government, the opposition always work Against the government, even for good policy, also. Phd scholars of developing countries always try to apply the policies of developed countries in their own country, that is totally unsuitable. That further deteriorates the existing structure.
Two possible ways for fiscal decentralization: (1) giving the revenue sources by transferring the rights to tax to state/province/city and (2) keeping the rights to tax in the central government, but then transfer the money to local governments. In Indonesia, we choose the second approach, since Indonesia is not a federal country. Thereby, the transfer funds could also serve as an accountability tool for local governments to obey to central government policies, including to monitor the spending.
Dear Basharat,
Thank you for your response. It is true that structural anomalies and the design of government policy particularly on fiscal decentralization can affect the desired outcome but may be that is not the case in Tanzania
Dear Akhmad,
Thank you very much for sharing your experience concerning fiscal decentralization in India which is more or less the same to Tanzania. It is also important to note that this type of arrangement can have a far reaching implication on the performance of Local Governments unless central /national government is committed to transfer the fund on time and of the required amount to local governments.
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