Factors Affecting Revenue-Generating Capacity Of Urban Local Government: The Case Study Of Ambo Town

Abstract

Revenue generated by local government can be divided into two broad sources which are the external source and internal source. Urban local governments have to meet their plans through continuously raising revenues from various sources such as market dues, fines and penalties, property taxes, licenses and permits. A study limited to explore to found out other factors for revenue generation capacity. The main objective of the study is to examine the factors affecting the revenue generating capacity in Ambo town. An exploratory research design was used. Out of 239 of the total population 140 participants were selected as sample randomly. Data was collected by using questionnaires. Some selected predictors consist of linkert scale such as management system, Infrastructures factors, Market factor, Political factors and technical and training factors have a mean of means predominantly more than the medium (2.50). Moreover, the descriptive analysis revealed the participants stated that the revenue generated capacity in the year was not sufficient i.e. than half of the linkert scale (2.14. The overall test (ANOVA test) showed that these factors are statistically significant predictors of revenue generation capacity. The regression results show that except work experience and Market factor all predictors i.e. educational level, management system, Infrastructures factors, Political factors and technical and training factors were statistically predicting the revenue generation capacity. Strengthening the institutional capacity, monitoring and evaluation system, technical support and sustained training and mobilize support, informing and educating taxpayers to providing accurate information in a way to enhance the city’s revenue generation and utilization