The article is organised as follows: Section 2 reviews the general characteristics of
the local government tax system. The importance of various revenue sources is
discussed and the institutional set-up for revenue collection briefly examined.
Section 3 explores how the present revenue system emerged. It examines the role
of the by-law system, and discusses the criteria used for tax design. Section 4
attempts to explain the gap between revenue potential and what actually is
reported to the local government treasury. Both administrative and political
factors are examined. In section 5 the outline for a revised local government
revenue system is presented. Finally, section 6 offers conclusions.