Implications of Municipal Revenue Collection on Service Delivery in South Africa: Challenges and Recommendations

Authors

DOI:

https://doi.org/10.31098/jgrcs.v4i2.2309

Keywords:

Revenue Collections; Service Delivery; Municipalities; Taxes; Debts; Property Rates

Abstract

In South Africa, citizens have protested against inadequate services provided by municipalities across different provinces. It is argued that most protests were caused by poor service delivery, a lack of community engagement, corruption, mismanagement of public resources, lack of institutional capacity and unqualified personnel. Thus, this study evaluates the difficulties associated with revenue collection and its implications on service delivery. To assess this aim, the study adopted a qualitative research approach. This study reviewed secondary data from different databases. The study keywords were used to search for relevant studies. The study was analyzed using a thematic content approach. Moreover, the study adopted two theoretical frameworks namely; ability to pay and the benefits theory. The key findings of this study include substantial difficulties in revenue collection, which in turn affect the provision of services. Poor service delivery is continuously caused by a lack of sufficient financial resources and ineffective revenue collection mechanisms. This study indicates a significant link between low revenue collection and inadequate service delivery. The recommendations of this study to municipalities include employing qualified officials, creating rebates and discounts for paying consumers, regularly examining critical credit regulations, guaranteeing high-quality service, and boosting revenue collection in light of these findings.

Downloads

Download data is not yet available.

Author Biographies

Chanthal Ronald, Durban University of Technology

Department of Accounting and Auditing, Faculty of Accounting and Informatics

Makofe Mokhachane Lepheana, University of Limpopo

Department of Taxation, School of Accountancy

References

Adebayo, A.O., Adeyemi, A.Z. & Osunwole, O.O. (2022). Tax Administration and Revenue Generation: A Perspective of Osun Internal Revenue Service. EuroEconomica, 41(1). https://www.ceeol.com/search/article-detail?id=1064409

Afrisam. (2022). Common Types Of Municipal Charges And Understanding The Difference Between Rates And Service Charges. Retrieved April 29, 2024 from https://www.afrisam.co.za/wp-content/uploads/2022/02/36.-Common-types-of-municipal-charges-and-understanding-the-difference-between-rates-and-service-charges.pdf

Ahlborg, H., Boräng, F. & Grimes, M. (2023). Logics of Action: How state institutions may undergird or undermine participatory development.

Aleksandrova, V., Krasteva, N., Kresnaliyska, G., Petrova, Y., & Baldzhiev, P. (2021). Municipalities’ own revenue as an instrument for financial independence. In SHS Web of Conferences (Vol. 92, p. 07003). EDP Sciences.

Anyaduba, J. O., Eragbhe, E., & Kennedy, P. M. (2012). Deterrent tax measures and tax compliance in Nigeria. European Journal of Business and Management, 4(11), 37-45.

Bala, A., Enoch, E.Y. & Yakubu, S. (2021). The problems of personal income tax on revenue generation in Gombe state. International Journal of Business and Management Invention (IJBMI), 7(7), 20-27. https://arxiv.org/pdf/2105.10995.

Bhandari, P. (2024, September). What Is Qualitative Research? | Methods & Examples. Scribbr. Retrieved October 10, 2024, from https://www.scribbr.com/methodology/qualitative-research/.

Bohler-Muller, N., Davids, Y. D., Roberts, B., Kanyane, B., Struwig, J., Masiya, T., & Nomdo, A. (2016). Service delivery challenges in South Africa. South African Social Attitudes Survey. Democracy, Governance and Service Delivery Programme. Human Sciences Research Council, Pretoria.

Burchell, R. W., & Listokin, D. (2012). The fiscal impact handbook: Estimating local costs and revenues of land development. Transaction Publishers.

Chauke, K.R & Sebola, M.P. (2016). Reflection on Deterrence Theory of Taxation in the Context of Revenue Collected by Municipalities and South African Revenue Service. SAAMPAM Limpopo Chapter 5th Annual Conference Proceedings 2016:83. http//Ulspace.ac.za/handle/10386/1603

Chauke, K.R. & Sebola, M.P. (2019). Value Added Tax: An Instrument used in some African Countries to Meet Fiscal Objectives. Journal of Reviews on Global Economics, 8, pp.1371-1377. Available at http://www.lifescienceglobalca.com/index.php/jrge/article/view/6328.

Chauke, K.R. (2016). Municipal revenue collection function: A comparative study on the efficiency and effectiveness of Tshwane Metropolitan Municipality and the South African Revenue Service (Doctoral thesis). Polokwane City: University of Limpopo.

Cooperative Governance and Traditional Affairs. (2024). Municipal Infrastructure Grant (MIG). Pretoria: Government Printer. Retrieved April 29, 2024 from https://www.cogta.gov.za/index.php/municipal-infrastructure-grant-mig/

Danisa, S.F., (2017). Investigating non-payment of municipal services in eThekwini Municipality. (Masters dissertation). Durban: University of Kwa-Zulu Natal. https://core.ac.uk/download/pdf/304374758.pdf.

Dlamini, G.M. (2017). Factors affecting the implementation of revenue collection strategy: a case study of Nongoma Municipality, KwaZulu Natal, South Africa. (Masters thesis). Durban: University of Kwa-Zulu Natal. https://core.ac.uk/reader/553632300.

Fanning, A. L., O’Neill, D. W., Hickel, J., & Roux, N. (2022). The social shortfall and ecological overshoot of nations. Nature sustainability, 5(1), 26-36.

Greater Tzaneen Municipality. (2022). Property Rates Policy. Tzaneen: Greater Tzaneen Municipality. Retrieved April 29, 2024 from https://www.greatertzaneen.gov.za/documents/policies/2022%202023%20(I)%20PROPERTY%20RATES%20POLICY%202022.pdf

Kleven, H., Landais, C., Muñoz, M., & Stantcheva, S. (2020). Taxation and migration: Evidence and policy implications. Journal of Economic Perspectives, 34(2), 119-142. https://doi.org/10.1257/jep.34.2.119

Koritnik, B., & Podlipnik, J. (2017). The Ability-to-Pay Principle as a Primarily Constitutional Basis for Tax Norms of a Financial Nature. Izzivi ustavnega prava, 21.

Makwetu, K. (2017). Public Finance Management Act 2016-17–Consolidated General Report on National and Provincial Audit Outcomes.

Mamokhere, J., & Thusi, X. (2024). Understanding the Underlying Causes of Corruption and their Implications on Sustainable Service Delivery in Limpopo Province, South Africa. Artha-Journal of Social Sciences, 23(3), 83-106. https://doi.org/10.12724/ajss.70.4

Maseko, G.J., Robbetze, N. & Masungini, A.W. (2023). Association between municipal credit management, responsiveness and service delivery. Africa’s Public Service Delivery and Performance Review, 11(1), a686. https://doi.org/10.4102/apsdpr.v11i1.686

Mdluli, M.M. (2021). The relationship between government revenue and government expenditure in South Africa: a cointegration and causality approach (Doctoral thesis). Durban: University of Kwa-Zulu Natal.

Mello, D.M. (2018). Monitoring and evaluation: The missing link in South African municipalities. TD: The Journal for Transdisciplinary Research in Southern Africa, 14(1),1-6. https://doi.org/10.4102/td.v14i1.409

Minh Ha, N., Tan Minh, P. & Binh, Q.M.Q. (2022). The determinants of tax revenue: A study of Southeast Asia. Cogent Economics & Finance, 10(1), 2026660. https://doi.org/10.1080/23322039.2022.2026660.

Molobela, T. T. (2016). The Effect of Revenue Planning on Municipal Financial Performance: A Case Study of the Polokwane Local Municipality in the Limpopo Province. South African Association of Public Administration and Management (SAAPAM), 262. SAAPAM Limpopo Chapter 5th Annual Conference Proceedings 2016.

Nampewo, Z., Mike, J.H. & Wolff, J. (2022). Respecting, protecting and fulfilling the human right to health. International Journal for Equity in Health, 21(1), 1-13. https://doi.org/10.1186/s12939-022-01634-3.

National Treasury. (1999). DIVISION OF REVENUE - National Treasury. Pretoria: Government Printer. Retrieved April 29, 2024 from https://www.treasury.gov.za/documents/mtbps/1999/5.pdf

National Treasury. (2023). MFMA Circular No.124. Municipal Debt Relief. Retrieved April 29, 2024 from https://www.treasury.gov.za/comm_media/press/2023/20230510301%20MFMA%20Circular%20No.%20124%20-%20Municipal%20Debt%20Relief.pdf

Nyaga, J.N., Omwenga, J., Murugi, N.M., Shalle, N., Ndung’u, L.W., Gekara, M.G. & Wairimu, N.S. (2016). Factors influencing tax revenue growth at Kenya Revenue Authority: A case of Meru station. International Academic Journal of Economics and Finance, 2(1), 1-15. https://www.iajournals.org/articles/iajef_v2_i1_1_15.pdf.

Ojong, C.M., Anthony, O. & Arikpo, O.F. (2016). The impact of tax revenue on economic growth: Evidence from Nigeria. IOSR Journal of Economics and Finance, 7(1), 32-38. https://doi.org/10.9790/5933-07113238.

Peyper, L. (2016). Financial health of municipalities a big worry [online]. Media24. Retrieved March 07, 2024 from https://www.fin24.com/Economy/financial-health-of-municipalities-abig-worry-20160601

Pieters, N.N. (2015). Evaluating revenue collection and allocation challenges faced by Ndlambe Local Municipality (Eastern Cape Province). Masters dissertation. South Africa: University of Fort Hare.

Plata Jr, R.B. & Pascual, E.A. (2022). Relationship between the Taxpaying Benefits Satisfaction and the Business Performance of Sole Proprietors in Nagcarlan Central Business District. Relationship between the Taxpaying Benefits Satisfaction and the Business Performance of Sole Proprietors in Nagcarlan Central Business District. International Journal of Research Publications, 95(1),14-14. http://doi.org/10.47119/IJRP100951220222873.

Public Servants Association. (2015). The Challenges of Service Delivery in South Africa. Retrieved April 15, 2024 from http://www.unesco-ihe.org/content/download/1016/11873/file

Republic of South Africa. (1996). The Constitution of the Republic of South Africa of 1996. Government printers, Pretoria.

Republic of South Africa. (2004). Municipal Property Rates Act No.6 Of 2004. Pretoria: Government Printer.

Sundani, N.D. (2023). South African Indigenous languages and digital technologies: Access, promotion and preservation. International Journal of Social Science Research and Review, 6(8), 41-51. https://doi.org/10.47814/ijssrr.v6i8.1385

Tshangana, A.H., (2011). Legislative and policy context for the application of value capture mechanisms by municipalities. Urban Land Mark. https://www.citiesalliance.org/sites/default/files/legislative_policy_context.pdf.

Uhr, C. G. (1951). Knut Wicksell: A centennial evaluation. The American Economic Review, 41(5), 829-860. https://www.jstor.org/stable/1809087

Weinzierl, M. (2016). Revisiting the Classical View of Benefit-Based Taxation (January 29, 2016). Harvard Business School BGIE Unit Working Paper, 14-101. http://dx.doi.org/10.2139/ssrn.

Downloads

Article Metrics

Published

October 31, 2024

Citation Check

How to Cite

Chauke, K. R., Ronald, C. ., Lepheana, M. M. ., & Mamokhere, J. (2024). Implications of Municipal Revenue Collection on Service Delivery in South Africa: Challenges and Recommendations. Journal of Governance Risk Management Compliance and Sustainability, 4(2), 49–63. https://doi.org/10.31098/jgrcs.v4i2.2309

Issue

Section

Research Articles

Article Index