Fiscal Autonomy of Local Government Authorities: Reflection on the Constitution and the Local Government Finances Act

It is undeniably that the fiscal autonomy of local government authorities constitutes a critical component of any financial decentralization in both developed and developing countries. It gives local government authorities freedom to impose taxes, generate revenue within their areas, allocate their financial and material resources, determine and authorize their annual budgets without external motivate. The fiscal component of local governments in Tanzania Mainland is mannered by the Constitution of the United Republic of Tanzania, 1977 and The Local Government Finances Act, 1982. Despite such recognition, powers of local government authorities in relation to local government finance are still, limited by central government. These limitations do not only deny local governments requisite powers to adequately raise revenue from their own sources and borrowings but also inhibit their ability to determine and approve such annual budgets. Key words: Fiscal Autonomy, Fiscal Decentralization, Local Government Authority, by-laws and rate