Outsourcing Revenue Collection: Experiences from Local Government Authorities in Tanzania

Abstract

Many local government authorities in Tanzania have reformed their tax collection systems in recent years in order to increase their revenue. This brief examines recent experiences with privatised revenue collection in seven urban and rural councils in Tanzania, with particular focus on the outsourcing of revenue collection to private agents. The article concludes that privatised collection offers no ‘quick-fix' to increasing a local government authority's revenue, as well as easing administrative problems with the revenue collection. While collection has increased and become more predictable for some councils which have outsourced revenue collection, others have experienced substantial problems with corruption and exceptionally high profit margins for the private agents at the expense of accomplishing a reasonable return to the local government authority. However, when appropriately managed and monitored, the outsourcing of revenue collection can establish a platform for more effective and efficient local government revenue administration.