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Term Paper:

Local Government Finance in Bangladesh

Course: Local Government System in Bangladesh

Course Code: PA-213

Submitted To
Mohammed Mahin Uddin
Lecturer: Department of Public Administration,
Comilla University

Submitted By:

Sumaya Morshed
Student Id: 11903038
Mst Nusrat Sanjida
Student Id: 11903039
Md.Tajul Islam
Student Id: 11903040
Asarna Akter
Student Id: 11903041
Nasrin Akter
Student Id: 11903042
Jakeya Sultana
Student Id: 11903043

Date of Submission: 10 September

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Contents

Sl. No: Topic Page

01 Acknowledgement 02

02 Abstract 03

03 Introduction 04

04 Definition, Characteristics, Local Government and local Self- 5-7

Government, Difference between Local Government and Local Self-
Government

05 Local Government Finance: British Period, Pakistan Period 7-10

06 Local Government Finance in Bangladesh Period 10-19

07 Problems of Local Government Finance 18-19

08 Recommendation 20

09 Conclusion 21

10 Reference 22
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Acknowledgement

First, praise and thanks to god, the Almighty, for his showers of blessings to complete the tram
paper successfully. We would like to express our deep and sincere gratitude to our honorable
teacher "Mahin Uddin" centre for our tram paper. He provide various opportunity and
information for our tram paper. We would also like to him for his friendship, empathy, and great
sense of humor. We are extremely great to our parents for their love, prayers, earning and
sacrifices for educating and preparing for our future.
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Abstract

In this tram paper, we can see that according to the context of Bangladesh, local Government is
very important for all over the administrative body of a country. As an important part of local
government, finance is also important issue. Local government typically control their specific
geographical region such as city, town, country or state. Presently local government of
Bangladesh is divided in to primary tire that are rural local government. Union Parishad is the
lowest level of rural local government. It has huge potential in poverty Reduction. This 140 years
old institution has wide roles and responsibilities in rural development and poverty reduction
empowered by the constitution. This study is intended to analyses the financial aspects and its
problems in the local government in Bangladesh, based on the understanding of the study, it is
understood that this study needs to deploy a mixed method research approach using both
quantitative and qualitative research techniques to achieve the specific objectives of the mission.
The data are collected concurrently or sequentially this study argues that, as the lowest tier of
local government body, up can implement activists for identifying potential areas of resources
mobilization. The study reveals that quality of the basic service rendered by the city
Corporations municipalities is quite poor, indeed some the inhabitants of the municipalities are
even in the favor of reverting to the erstwhile Union Parishad regime. The proposal local
government finance Commission seems to enjoy extensive support.
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Introduction
Local government is the government of the village and district level. It is the government closet
to the common people that involves in day-to-day life and attempt to resolve problems of
ordinary citizen. Rural areas in Bangladesh often lag behind the rest of the country in
development indicators and SDG achievement rural local government known in Bangladesh as
Union Parishad (ups); have been functioning as the lowest tier of administrative government
units since the 1870s. The government has already identified certain steps. Therefore, those local
bodies can generate funds from local sources. We even contemplating about a certain portion of
value added tax (vat) and income tax going directly to the local body coffers. Actually local
government finance varied from British period to Bangladesh period. This period discuss the
various source. Such as income, expenditure, Budget, and Audit. The object of this research is to
identify the major challenges regarding resource mobilization in local government of
Bangladesh. and to explore possible explanation for the purpose of suggesting some sources of
additional revenue resources including expansion of holding tax to cover non- residential
properties tax on traders increase tax on business, professionals, tax on cinemas, entertainment
and amusements fees for licenses and permits and lease money for hats, bazars, ferries and water
bodies as well as sharing of land transfer tax with central government, motorized three-wheelers,
service charges on water supply, sanitation and waste management leasing of government land
for tree plantation.
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Definition of Local Government and Local Self-Government

A local government is defined as the people who have the authority to make decision or pass
lows in a small geographical area near to them. An example of local government is the town
Council. Local government generally act within powers delegated to them by Legislation or
directives of the higher level of government (e.g., central, national, federal Government). Two
important elements are found in any definition of local government, the presence of a higher
authority and territorial boundary. Local government plays significant role in politics in a
democratic political system.

" Local government plays significant role in institutionalizing politics in a democratic political
system, making pro- people civil administration and conducting participatory development
programmers throughout the world, primarily it provides scope for the local people to engage in
the local level politics and administration." (Ahmed, 2007)

"The term local government refers to a political sub- division of a nation or state which is
constitution by low and has control of local affairs, including the power to impose taxes and
exact labor for prescribed purposes." (United Nation)

"Local government as a public organization authorized to decide and administer a limited range
of public policies within a relatively small territory, which is a sub- Division of a regional
national government local government is at the bottom of pyramid of government institutions,
with the national government at the top and intermediate governance." (Duane Lockard).

Characteristics of Local Government

From the analysis of all the definitions made to local government by different made to local
government by different authors, emerge the following main characteristics:

1. This government has statutory status, therefore it is defined, recognized and functions based
on the laws of a country.

2. These bodies have the right to decide about their own local taxes on the territory where
jurisdiction extend.

3. They are characterized by the right of local community participation in decision-making

process or management of local affairs.

4. It is known the capacity to act independently from central government bodies, within the
limits set by law.

5. These bodies serve the general interest of the citizen, i.e., common interest.
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Analysis of all the definition given above shows that local government is a combination of
several elements such as the existence of a local authority regulated by law, the local population
and a defined territory, autonomy, limited by the central government, separation of local and
non-local functions.

Local Self-Government: Local self- government is an institution comprising of locally

elected representatives managing the affairs of the locality and providing them with basic
amenities. Local self-government are those bodies that preserve the administration of a subject or
small group equipment to the village, town or a metropolis. These bodies are appointed by using
the government representing the local inhabitants, which raises its earning partly via regional
taxation and extra manner. Local self- government denotes the right and the ability of local
authorities, within the limits of the law, to regulate and manage a substantial share of public
affairs under their own responsibility and in the interests of the local population.

"Local self-government is defined in the Encyclopedia of social science as the government which
as a territorial non sovereign community having the legal right and the necessary organization to
regulate its own affairs." (Kamal, 2005:285)

"Local self-government means an intra - sovereign governmental unit within the sovereign state
dealing mainly with local affairs, administered by local authorities, composed of persons elected
in accordance with law and subordinate to the state government."

(Al-Hossien et al.2012:82)

“Local self-government means an intra-sovereign governmental unit within the sovereign state
dealing mainly with local affairs, administered by local authorities and subordinate to the state
government. (Jahan, 1997:92)

In political terms, it concerns the governance of a specific local area, constituting a political sub-
division of a nation, state or other major political unit.

Difference between Local Government and Local Self-Government

Local Government Local Self-Government
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1.In local government is the administration of Local self-government consists of elected

the locality is looked after by the officials representative who administers local affairs
appointed by the state government and gets government grants.

2. Local government is the part of state Local self-government is not part of the state
administrative system. administrative system.

3. The state exercise direct control over local Local self-government control by the local
administration. government.

4. Bureaucracy dominates local government Local self-government system lesser influence

system. of bureaucracy.

5. Local government makes its decision Local self- government makes its own decision
internal and foreign affairs. for its internal affairs.

Local Government Finance

The terms of Local Government Finance, the Department is focused on the financial well-being
and effective financial management and accountability of local authorities and the promotion of
value for money principles in the sector. (https://www.housing.gov)

Features of local government: Almost all such local government bodies share certain
characteristics: a continuing organization; the authority to undertake public activities; the ability
to enter into contracts; the right to sue and be used and the ability to collect taxes and determine
a budget. (https://www.infoplease.com)

Features of local government finance: There are at least three features of local government
finance, which distinguish it from central government finance. These are as follows:

1. The power of local governments with small territorial jurisdictions to collect indirect taxes
(such as sales tax) is limited because the evasion of indirect taxes is easier in the case of local
government than in the case of the central government.

2. In most cases, local government bodies have to depend on the central government for finance.

3. There are two school of Opinion regarding the effectiveness of local government in mobilizing
resource. According to one school, people feel inclined to pay taxes to local government bodies,
which provide direct services to the community. According to another school, local government
bodies are ineffective in collecting taxes because of factionalism in the rural areas. However, in
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most developing countries, the national government seems to be more effective than local
government bodies in collecting taxes. (Khan, 1983)

The factors are affecting local government finance: Changes in three social and demographic
factors – population, age distribution, and personal income – have significant and lasting effects
on local budgets. Population. As population, increases and fixed costs are divided among more
households, the resulting economies of scale will mean lower.

Objective of Local Government Finance Control: It unfolds the real practice of accounting
and management of finance of the local government chosen as the case study. One of the aims of
local government is to promote the economic and social welfare of the people with appropriate
economic policies.

British Period

Over the Indian subcontinent, almost two hundred years of British rule (1757-1947), various 
Experiments were made with the local government system. All the experiments were intended to
devise a system that would serve British imperial interests. The major objective of the British
rule in India was twofold: maximization of land revenue collection and maintenance of law and
order. Naturally, the British as an imperial power had little understanding of, and interest in,
indigenous local self-governing institutions. In 1870, however, the Village Chowkidari Act in the
rural areas of Bengal established union Panchayats to collect tax in order to 
maintain Chowkidars (village police) (Siddiqui, 1992).

Lord Ripon's Resolution on local self-government in 1882 laid the foundation of local self-
government in rural India. This resolution was important for two reasons: it set out general
principles for development of local institutions in future and provided the rationale behind
functions of local bodies (Tinker, 1954).

The Ripon resolution was passed in 1885 as the Bengal Local Self-Government Act III. Under
this act, three tiers of local bodies were created in Bengal. These were District Boards, the Local
Boards and Union committees. At the lowest level, a Union Committee consisted of a number of
villages. The Union Committee was concerned with the management of local ponds, schools and
roads. However, the management of the rural police continued to remain with the Chowkidari-
Panchayats (Rashiduzzaman, 1968). 

Following the 1886 general election, a conservative administration headed by Lord Salisbury
was formed. However, the Conservatives did not have a majority of seats and had to rely on the
support of the Liberal Unionist Party. As part of the price for this support, the Liberal Unionists
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demanded that a bill be introduced placing county government under the control of elected
councils, modelled on the borough councils introduced by the Municipal Corporations Act 1835.

Accordingly, the Local Government (England and Wales) Bill was introduced in the House of 
Commons on 19 March 1888, by the President of the Local Government Board, Charles Ritchie.
The Bill proposed the creation of elected county councils to take over the administrative
functions of the magistrates of the Quarter Sessions courts, that ten large cities should be
"counties of themselves" for the purposes of local government and that each county was to be
divided into urban and rural districts, based on existing sanitary districts, governed by a district
council. The county and district councils were to consist partly of directly elected "elective
councilors" and partly of "selected councilors", chosen by the elective councilors in a
similar manner to council members in municipal boroughs. Until the 1870s, officials, or their
designated representatives, ran urban local government bodies. Gradually, municipalities became
representative bodies with the promulgation of a number of acts between 1860 and 1947, starting
with the Municipal Development Act of 1864. These acts, among other things,
introduced election as a mode of choosing one’s representative. Chairs and Vice Chairmen of the
municipalities, however, continued to be elected indirectly by the popularly elected
commissioners. The Bengal Municipal Act of 1932 strengthened the powers of Municipalities in
levying rates and taxes and in the utilization of funds (Siddiqui, 1992).

Simultaneously, unequivocal powers were given to local officers to inspect, supervise

and control municipalities (Khan, M. M. 1997). Within the urban local government institutions,
British policy resulted in the setting-up of a municipal administration in the Presidencies and
giving responsibilities to municipal committees for a number of civic amenities. However, the
same act provided considerable powers, to the government and local officials, to inspect,
supervise and control Municipalities and negated the powers of taxation of local level bodies to a
large degree.
During this earlier period, union boards consisted of two-thirds elected members while the rest
were nominated. The Chairman was elected from among members of the union boards. The
boards were given a number of specific responsibilities including the authority to levy taxes. By
the end of the 1920s, district boards were functioning under the stewardship of non-official
chairs.

Pakistan Period
From 1947 to 1959, there was no remarkable change in financing pattern of local government
institution. Government control over the local bodies significantly increased since 1959. This
time central government could reject the budget of LGI. In accordance to financial autonomy and
responsibilities, in general, this institution became weaker. The service of local bodies, the tax
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collection process and their revenue started deteriorating. There was no attempt increase revenue.
At that time, Union Council could not generate enough revenue to pay even its skeletal staff.

For rising government expenditure, it was not possible to give grants regularly to the local
bodies. The services and responsibilities of the local institution were increasing steadily.
However, there was no corresponding increase in financial autonomy. In this background, the
martial Law authorities promulgated the "Basic Democracies order-1959” which constituted the
basis of local government institutions during the 60s.ln this system, the Divisional Council and
Thana Council were fully financed by the government. They did not have any power to levy
taxes. With prior approval of provincial government district Council could levy the specified
taxes and the prior sanction of divisional commissioner Union council could levy of specified
taxes. The district council and the union council derived its income from following sources:

• Local rates,

• Taxes, tolls &

• Government grants

Of the many sources of income of district & Union councils the main ones were: (a) tax on land
& buildings, (b) rate for village police & (c) taxes on vehicles. Government grants to the various
tires of local government institutions increased to a very significant extend. Under the Basic
Democracies Order of 1959, the union councils could collect 14 types of taxes, rates & fees.
(http://repository.library.du.ac.bd).

Local Government Finance in Bangladesh Period

In this part, we will know about financial pattern of Bangladesh local government. After 1971,
the Bangladesh Government brought about a number of changes in the Local Government
system. In Bangladesh period, after independence, Union council was renamed as the union
panchayat. It was again changed to the Union Parishad. With the previous sanction of the
prescribed authority, the Union Parishad could levy specified taxes, rates, tolls & fees. Besides
these, Government grants were also an important source of revenue. In Bangladesh, martial law
period, elections were held for Union Parishad. After independence, the financial position of
local bodies was very grievous. It was poor tax collection, corruption & low caliber of the local
bodies’ personnel, tax evasion, etc. The financial administration remained under the full control
of the national Government.

The local government ordinance promulgated in 1976 brought about certain rearrangements in
the local bodies. According to the financial managements of the local bodies could be divided
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into three parts, namely constitution of the local fund, revenue from tax and non-tax sources and
expenditure. Every local government institution was empowered to have local funds of its own.

At the Thana level, local body was renamed as the Thana Parishad. The Thana parishad was
fully administrated by the government officials and it fully financed by the government.
According to local government, ordinance- the union parishad and Zilla Parishad were required
to prepare their self-budget annually in a prescribed manner and form, then obtain sanction of the
relevant authority before the commencement of the financial year. Actually, local government
budget has always been a family budget.

Union Parishad
In present time, Union Parishad is locally part of local government. It is local self-government.
Here we will know how to do income Union Parishad.

Income: According to Local Government Ordinance 1976, the Union Parishad could collect any
of the 28 items of taxes, rates, tolls and fees. These are Tax on animal, Fees for markets, Fees for
slaughtering animal, Conservancy rate, Tax on advertisements, and so on.

According to the Local Government (UP) (Amendment) Act 1993, the Union Parishad may levy
the following taxes, rates, and fees:

1. Tax on the annual value of homestead or Union rate to be levied in the prescribed manner.

2. Tax on professions, trades and callings.

3. Tax on cinemas, dramatic and theatrical shows and other entertainments of similar nature and
amusements.

4. Fees for licenses and permits granted by the Parishads.

5. Fees (lease money) from the specified haats, bazaars and ferries within the Union boundaries
to be determined by the government.

6. Fees (lease money) from Jamaal is situated entirely within the Union boundaries to be
determined by the government.

The financial administration and of the Union Parishad is well defined and systematic. The Local
Government (Union Parishad) Ordinance, 1983 contained only fives taxes, rates, fees, which
only UP could levy. These were as follows:

1. Rate on annual value of homestead and residential land adjacent thereto or Union rate;

2. Rate for the village police

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3. Fees on births, marriages and feasts (the rate of fees on birth has to be progressive);

4. Community tax on the adult population of the Union for civil works aimed at providing or
augmenting public welfare, unless the UP concerned exempts any person from paying this tax if
such a person voluntarily participates in such work or makes arrangements for getting his work
done by someone else on his behalf;

5. Fees for specific welfare activities or the maintenance of public utility services rendered by the
UP.

Expenditure: Under the 1976 Ordinance, the expenditure of local bodies could be broadly
divided into two parts namely on establishment and development. The local fund was to be spend
under the following heads

1. Payment of salaries and allowances to all the employees of local parishads

2. Meeting the expenditure charged on the local funds

3. Fulfillment of any obligations or discharge of any duty imposed on the local perished

4. Meeting the expenditure declared by the local parishad with the previous sanction of the
prescribed authority to be an appropriate change on the local fund

5. Meeting any expenditure as directed by the government

The charged expenditures, which the local parishad had to meet, were as follows:

1. Salary payments to the local parishads employees

2. Expenditure specified by the government from time to time i.e. election, maintenance of local
parishad service, auditing of accounts etc.

3. Expenditure in connection with any decree, judgment or award against the local parishad by
any court or tribunal

4. Any expenditure declared by the government to be so charged.

Budget: According to Local Government (Union Parishad) Act 2009, in this act 57 article
mention about its budget and budgeting system. That is to say, each union shall formulate the
revenue and expenditure budget of the union council in the prescribed manner 60 days before the
commencement of the financial year.
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Paurashava
Paurashava is an urban side local government institution. Paurashava levy taxes on
advertisement. In 2003, Bangladesh government made tax schedule for Paurashava under section
56 of the Paorashava Ordinance 1977. In this tax schedule are equal for all Paurashavas in the
case of companies, firms, and so on.

Income: Paorashava have major five source of income. In Local Government (Paorashava)
Ordinance 1977, Paorashava can levy taxes on 26 items listed. Such as holding tax, immovable
property transfer tax, taxon profession, tax on vehicles other than motor vehicles and boats,
trades and callings, tax on advertisements, and so on. According to Local Government
(Paorashava) Act 2009, article 89 mention financial related. In this article mentioned, there will
be funds that called Paorashava funds. Any income of municipalities will be deposited in this
fund.

Expenditure: The Expenditure pattern of Paorashavas are the same as in the case of UPs. For
providing various service, Paorashava also hire people. They need to buy furniture, equipment’s,
office supply, for the office and office staff. Paorashava also spends money for development,
employee salary, and new infrastructure and so on. According to Local Government
(Paorashava) Act 2009, article 90 mention expenditure of Paorashavas, some point are:

Budget: According to Local Government (Paorashava) Act 2009, before the commencement of
each financial year, the municipality shall make a statement of all in and expenditure, which
shall be demand budget. The statement shall be submitted to the Divisional Commissioner or
government authority.

Zila Parishad
Zila Parishad is district level local government bodies. It is import most important part of local
government. The district council manages everything in the district. Here we will look at the economic
issues of the district.

Income: According to the Zila Parishad Act, 2000, ZPs are allowed to impose taxes, rates, fees,
on only specific eight items. These are follows:

1. A portion of the Immovable Property Transfer Tax (IPTT);

2. Tax on advertisements
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3. Tolls on roads, bridges and ferries maintained by the ZP;

4. Rate for public welfare activities of ZPs

5. Fees from schools established and managed by the ZP

6. Fees for the use of benefits derived from any work of public utility maintained by ZP

7. Fees for specific services provided by ZPs

8. Any other tax allowed by the national government.

Expenditure: Zila Parishad receive two kinds of government grants, namely normal grants and
Rural Works Program (RWP) grants. The normal grants consist of several different components.
This grants divided annually among the local bodies based on population. RWP funds are to be
spent on the reconstruction and construction of physical infrastructure such as roads, market
place, bridges and so on. Other expenditure categories are minor. In Agricultural sector, ZPs
provide a few small facilities. Provide some heath expenditure; provide welfare related
expenditure and so on.

Budget: Every Zila Parishad shall , in the prescribed manner, prepare and sanction, before the
commencement of each financial year, a statement of its estimated receipts and expenditure for
that year, here in after referred to as the budget and forward copy send to Divisional
Commissioner and to the Government.

Upozila Parishad
The name of UPZ was abolished and the Upozila was renamed as the Thana. Eight source of
revenue are reserved earlier for the Upozila Parishad redistributed between UP and ZP,
according to new Act of 1993.

Income: Upozila Act was passed in 1998, in this act, under the section 44; nine sources of
income are given. Then there was no Upozilz Parishad. Thana Unnayan Samannaya Committee
is performing their work. According to the Upozila Parishad Act 1998, the following rates, taxes,
fees, may be levied by the Upozila Parishad.

1. Lease money from specified haats, bazaars, Jalmahals, and ferries within the boundaries of the
Upozila to be determined by the government.
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2. Tax on business organizations and industries situated in the headquarters of the Upozila in
which a Paorashava is established.
3. Tax on cinemas where a Paorashava is not established, tax on dramatic, theatrical shows and
Jatras.
4. Tax on street lighting.
5. Fees on fairs, exhibitions and entertainments organized by public or Non-Government
Organizations.
6. Fees on professionals, trades, license and permits granted by the Parishad.
7. One percent land registration fees and two percent of the land development tax within the
Upozila boundaries.
8. Any other taxes, rates, tolls, fees and other sources empowered by the government from time
to time.

Expenditure: According to the 1976 Ordinance, the expenditure of local government bodies
could be divided into two parts, first one is establishment and second one is development.
Following are:

1. to all the employees of Parishads payment salaries and allowance.

2. Meeting the expenditure charged on the Parishads fund.
3. Welfare working expenditure,
4. Meeting any expenditure as directed by the government. And so on.

Budget: Every Upozila Parishad shall , in the prescribed manner, prepare and sanction, before
the commencement of each financial year, a statement of its estimated receipts and expenditure
for that year, here in after referred to as the budget and forward copy send to Divisional
Commissioner and to the Government.

The System of Account and Audit in the Local Bodies

The accounts of every local body are audited in a manner maintained by the prescribed authority.
In the case of Zila Parishad, Upozila Parishad, Hill Tracts Local Government Parishad, Union
Parishad, City Corporation, the account are to be audited by the Comptroller and Audit-General
in such a manner as he deems fit. The following procedures of auditing are followed for all local
government bodies.
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i) The audit authority can examine not only all the books and documents maintaining accounts
but also interview Chairman, Member, Mayor, Deputy Mayor, Commissioner, Officer or any
employee of the local government bodies concerned.

ii) Completion of audit, the authority of audit is to submit an audit report to respective
authorities. Among others things, the report has to contain:

 Cases of loss. Waste or misapplication of the local body fund;

 Cases of embezzlement;
 Cases of other irregularities in the maintenance of accounts;
 None-utilization

Hill District Local Government Finance

Rangamati, Bandarbon and Khagrachhari districts under Chattogram division, occupies one-
tenth area of the country and is known as hill tracks region. It is the part of local government.

Income: Ministry of Chittagong hill tracks affairs has been created in accordance with the
provision of the peace accord signed on 2 December 1997to ensure overall development of hill
tracks region women constitute more than50percentage of the beneficiaries of the projects and
programmers implemented through this ministry. There are various function such as

1. Implementation of chattogram hill tracks peace accord through adoption of programs with the
objective to bring about development on socio-economic condition.

2.Supervision and monitoring of NGOS activities in the Chattogram hill tracks area.

3. Development of biodiversity and eco-friendly Tourism in Chattogram hill tracks area.

4. Intact hill tracks related rules regulation and provision.

Expenditure: Ensuring political, social, Educational and economic rights of the people living
in Chattogram hills tracks region through implementation of welfare-oriented development
programed such as:

1. Provide DSP shallow tube well and deep tube well for supplying of safe drinking water and
dazing small canal.
 17

2. Provide treatment, medicine and food for improving the quality of health care services.

3. Create infrastructure for developing tourist spots.

4. Providing small industries livestock, training, and necessary tools for poverty alleviation,
women’s advancement and socio economic development.

5. Safeguarding the language and culture of different tribes of the people of Chattogram hill
tracks.

In the current fiscal, the size of expenditure in the budget has been reduce to taka 4.65trillion
(tk4.64, 573 crore) to taka 4.43 trillion (taka four, 42,541crore).In that sense, the coming budget
is taka 806.49 billion (tk80, 649crore) or 18 percent higher than the last budget.

Budget: According to the supplementary budget for the current (2018-19). The targets for
revenue earning and expenditure of the current fiscal year 2018-19 was determined on the
assumption that there will be impending reforms in the structure of manpower and work
procedures in the national board of revenue (NBR)and the nation’s economy will continue to
grow. The amount of revenue collected up to March 2019 of the current fiscal year was 54.90
percent of the original annual target.

Revised budget deficit and its financing: The Budget deficit for the current fiscal year was
estimated at Taka 1, 25,293 crore, which is 5.0percent of GDP. Against the original budget
deficit, the estimation for external Financing was tk54, 067crore which has been reduced to taka
47,184 crore in the revised budget. From domestic source the revised estimated of financing
from savings instrument and other sources is taka 47,850 crore.

Auditing: Audit has been defined in various ways but little variations According to Benin
(2001) in his dictionary of management vol 2 defined audit as a critical examination and analysis
of an activity by an independent person performed to check and often to check security.

An audit system in the hill tracks area as a part of local government. An audit is a security-
relevant chronological records that provide documentary evidence of audit complete this work:

 Audit records typically financial transaction, in the hill tracks.

 Auditor provides various scientific research for overcoming various problem for the hill
tracks.
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3. The process that creates an audit trail is typically required to always run in a privileged mode.

 An auditor work as a work health and safety coordinator for the people of hill tracks
people.

 Establishment and implementation of an internal audit programmer to review the

significant risks as well as other broader matters. (https://en.m.wikipedia.org)

Problems in Local Government Finance

The local government bodies had never been, in independent Bangladesh, ‘self-governing’
bodies in the true sense of the term. They could simply be labeled as an extension of the central
government with guided and limited local participation. Local governments have always been
institutionally and financially weak, poorly managed and lacked social and political credibility.

Absence of Real Autonomy: A serious constraint on both rural and urban local government is
its dependence on central government. One authority describes the relationship between national
and local government as a 'clear patron-client relationship' (Siddiqui; 2005). Limited powers,
functions and jurisdiction of local government are all delegated by central government, which
retains a high degree of overall control in both rural and urban areas. This effectively limits the
autonomy and efficiency of local government.

Financial Control over Local Bodies: Local government bodies have been chronically
resource-poor in Bangladesh. Local Government bodies are compelled to take loan or grants
from central government at almost every aspect of Union Parishad (Ahmed; 2000: 382). Local
self-government bodies in Bangladesh are in constant shortage of funds. The sources of their
income are generally taxes, rates, fees and charges levied by the local body, and rents and profits
accruing from properties of the local body and sums received through its services .Contribution
from individuals and institutions, government grants, profits from investments, receipts accruing
from the trusts placed with the local bodies, loans raised by the local body and proceeds from
such services are other sources.

Excessive Controlling by Central Government: Local self-government bodies are being

strongly controlled by the higher-level authorities. The local governments are subject to control
in various matters, such as;

(a). The National Government exacts legislation on local bodies and formulates detailed rules
related to conducting of election, business, powers and duties of chairmen, assessment of taxes,
preparation of budget, making of contracts, appointment and service matters of local government
 19

employment, accounts and audit and many other important areas. The Central Government has
the final authority in the determination of the size and boundaries of the local body's territory.

(b).In the field of finance, government supervision and control are wide and strict. In addition to
financial control in general, the central government can wield power by reducing or enhancing
Grant-in-aid to local bodies, even to city authorities like Dhaka.

(c). The Central Government asserts control and supervision over general administration of local
bodies, including large City Corporations. The central government may order an inquiry into the
affairs of a local body generally or into any particular affair either on its own initiative or on an
application made by any person to the government.

Over Controlling by the Administrative Official: According to the constitution, the

government should encourage the local government institutions, not control them, but
administrative officials run some local government institutions, which is a violation of the
constitution. Although laws allow the local government institutions to realize holding taxes, it
cannot be possible because of the order of executives.

Recommendation
According to the recommendations of Local Government Dynamic and strengthening committee
2008. The following things could be maintained for strengthening local government.

a) In order to ensure honest, worthy and capable candidate at local level, the criteria of
disqualifications to be formulated rigidly.
 20

b) Separate Local Government Pay Scale should be formulated. An accountant having computer
skill should be recruited at every Union Parishad.

c) Every Five Years local taxation system should be updated.

d) Statutory local Government commission should be established where the number of members
will be there for five years who will be responsible for evaluating and solving all the problems of
Local Government.

e) The Auditing system should be started and strengthened.

Besides, above solutions the following opinions would be effective for strengthening local
government in Bangladesh.

a) In order to strengthen local government, power must be decentralized to the chairman of UP

and UZP, MPs’ involvement to local body should be given up.

b) The immediate past caretaker government’s (CTG) the UPazila Ordinance 2008 should be
implemented.

c) The functions and resources allocation in decentralization of “finance follows functions” –this
means that resource allocation depends on the functions of the decentralized administration
allowed by the national government through parliament. (Ahmed, 2000)

Conclusion
There are serious difficulties in the current system of local government finance in Bangladesh.
Although local government has little incentive to increase their tax efforts and even less
discretion in their choices of tax rates. For the most part, local government remains heavily
dependent on the national government for their revenues, and much uncertainty surrounds the
levels of this support. There is scope for improvement of revenue generation capabilities of the
local government. Systematic improvements in every aspects of the local bodies are needed for
 21

this. The public representatives will have to be more dynamic and conscious about the needs of
the people and must find out the means to finance the required services and infrastructures. The
government should give importance and take necessary steps for solution.

References

1. (https://en.m.wikimedia.org. (n.d.). Retrieved from (https://en.m.wikimedia.org: .

(https://en.m.wikimedia.org

2. (https://www.housing.gov. (n.d.). Retrieved from .(https://www.housing.gov.ie/local-

government/administration/finance/local-government-finance): .
(https://www.housing.gov.ie/local-government/administration/finance/local-government-
finance)

3. (https://www.infoplease.com. (n.d.). Retrieved from

(https://www.infoplease.com/encyclopedia/social-oscience/government/concepts/local-
government/characteristics-and-types): (https://www.infoplease.com/encyclopedia/social-
oscience/government/concepts/local-government/characteristics-and-types)

4. (2008, january 5th). Dhaka, Dhaka, Bangladesh: Prothom Alo.

5. Ahmed, E. (2000). Bangladesh Public Administration Anonna Publication. Dhaka: Anonna

Publication.

6. http://repository.library.du.ac.bd. (n.d.). Retrieved from

http://repository.library.du.ac.bd:8080/bitstream/handle/123456789/481/Md.%20Bachu
%20Mia.pdf?sequence=1&isAllowed=y:
http://repository.library.du.ac.bd:8080/bitstream/handle/123456789/481/Md.%20Bachu
%20Mia.pdf?sequence=1&isAllowed=y
 22

7. https://en.m.Wikimedia.org. (n.d.). Retrieved from https://en.m.Wikimedia.org/wiki/Audit-trail

: https://en.m.Wikimedia.org/wiki/Audit-trail

8. Khan, A. A. (1983). Local Government Finance in Bangladesh . Dhaka.

9. Schroeder, larry; “A Review of Bangladesh Zila and Union Parishad Finance”, (Zila Roads
Local Finance Project) Interim Report No.I, New York, Syracuse, Syracuse University, 1983.
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