The Local Government Finance Commission (LGFC) is established under Article 194 (1) of the Constitution of the Republic of Uganda (1995) with the mandate and functions as defined under Article 194 (4) of the Constitution and the operational framework as provided for in the Local Government Finance Commission Act (2003).
The functions of the Commission are elaborated in section 9 of the Local Government Finance Commission Act (2003)are largely of an advisory nature and include:-
- Advise the President on all matters concerning the distribution of revenue between the Government and Local Governments and the allocation to each Local Government of money out of the consolidated fund.
- Consider in consultation with the National Planning Authority and recommend to the President the amount to be allocated as equalization and conditional grants and their allocation to each Local Government.
- Consider and recommend to the President potential sources of revenue for Local Governments.
- Advise the Local Governments on appropriate tax levels to be levied by Local Governments.
- Mediate in case a financial dispute arises between Local Governments and advise the Minister accordingly.
- Analyze the annual budgets of Local Governments to establish compliance with the legal requirements and notify the Councils concerned and the President through the Minister for appropriate action.
- Recommend to the President through the Minister, the percentage of the National Budget to be transferred to Local Governments every financial Year.
- Recommend to the President, Central Government taxes that can be collected by Local Governments in their respective jurisdiction on an agency basis.
- Perform such other functions as may be prescribed by law.