Measuring the Growth Rate of Internal Revenue of Municipal Governments: Focus on Baglung Municipality, Gandaki Province, Nepal

Abstract

Municipal governments are powerful institution at local level. They can generate revenue from various sources. This paper aims to quantify municipalities' internal revenue streams. Following the adoption of Nepal's new constitution in 2015, it includes provisions for an independent, three-tiered administration to ensure that citizens receive effective services and a balanced level of growth. This study attempts to calculate the growth rate of the internal revenue sources of this district's oldest municipality using financial information from audited statements from the office of Baglung Municipality. For the fiscal years from 2018–19 through 2022–23, the data are used to calculate the municipality's internal revenue growth rate. From the study, it is observed a consistent positive growth trend except revenue from other sources, it is on the basis of internal revenue items of fiscal year 2018/19. Simply, it can be a positive sign for the local economy. Similarly, of the expenditure, skill development training expenditure for municipal staffs has impacted positively for municipal internal revenue generation. This impact is also found statistically significant with strong positive correlation between the variables. Additionally, this study indicates that the successful implementation of federalism at local level requires strong leadership, co-ordination among the different level of governments, strong financial plan, diversification of revenue sources, effective and efficient tax collection processes, engagement of local community to gather potential tax revenue sources. Creating policies that are centered on providing excellent services to the citizen will help this paper make municipals more effective.