The Constitution of the Republic of Uganda, under Article 176 (2) (d) states that “there shall be established for each local government unit a sound financial base with reliable sources of revenue”. 

The mandate to levy, charge, and collect appropriate fees and taxes is derived from Article 191(1) and (2) of the Constitution which empowers local governments to levy, charge, collect and appropriate fees and taxes such as rents, rates, royalties, stamp duties cess, fees on registration and licensing and any other fees and taxes that Parliament may prescribe. Article 196 (a) of the Constitution requires each local government to draw up and maintain a comprehensive list of all its internal revenue sources and to maintain data on its total revenue potential. In addition, Section 77 (1) of the Constitution empowers local governments to formulate, approve and execute their budgets and plans and to collect revenue and spend it.

Section 85 of the Local Government Act, states that (1) “in the city and municipal councils, revenue is to be collected by division councils”; (1b) “the city or municipal council may, with the concurrence of a division in its area of jurisdiction, collect revenue on behalf of the division.” The Local Government Act (LGA), Chap 243 Section 80 (2) requires each local government to draw up a comprehensive list of all its local revenue sources from which it expects to collect revenue during the financial year and to maintain data on total potential collectable revenues. 

In addition Regulation 33 (1) of the Local Government Financial and Accounting Regulations (2007), revenue registers shall be used to show details of revenue due, revenue collected and all arrears, including a record of steps taken to collect all arrears. According to Regulation 31 of the LGFARs (2007), the authority for revenue collection is given to the council every year through the approved estimates. On approval of the complete estimates by the local government council, the council may collect the revenue. Therefore, the council must budget for its revenues every year. Under Regulation 32 of the LGFARs, the head of finance is responsible for ensuring that revenue collectors carry out their duties properly, and to ensure that all revenue due to the council is promptly collected in the approved manner and banked intact.