Kampala, Uganda | THE INDEPENDENT | Kampala Capital City Authority-KCCA has passed new property tax rates.
The new rates are 4 percent of taxable value of properties generating five million and below and 6 percent for properties attracting revenue of five million shillings. Currently, KCCA charges a flat rate of 6 percent of the taxable value on commercial properties.
According to the Local Government Act, local governments can charge a percentage not exceeding 12% of the taxable value of the property and a minimum of 2,000 shilling. The taxable value is 74% of the revenue generated by a property.
The Lord Mayor KCCA, Erias Lukwago says that the charges although still high for the urban poor make a difference. He says property owners are overstretched with taxes because they also have to pay rent tax to Uganda Revenue Authority-URA.
Last year, Lukwago proposed a system of taxation where taxpayers are categorized depending on the amount of revenue generated from their property
The proposal stated that property owners with a taxable value below five million should be taxed at 0%. Those with property whose value is between Shs 5m and 20 million shillings pay 3 percent while those above 20 million shillings are taxed at 5 percent.
The Steering Committee on Revenue Collection was tasked to study the proposal, conduct consultations and come up with recommendations. Lukwago who authored the proposal often demanded the committee to deliver on the assignment given over six months back.
According to the report presented on Tuesday during the council sitting, the committee Chairperson Doreen Sabuka the councillor Makindye West found that while there was need to revise the rates, it also noted the significance of all property owners to contribute through taxes.
The team recommended that a policy for the Urban destitute be drafted to guide how the urban poor should be handled but not exempted from paying taxes. The committee further recommended that properties attracting revenue of five million and below be rated at 5 percent while those above five million be rated at 6 percent.
According to Sabuka, the proposal was based on the fact that over 100,000 properties fall under the category that attracts five million shillings and below and they needed to contribute to tax.
According to the report, the new rates shall cause KCCA a revenue deficit of six billion shillings.
The acting Executive Director Andrew Kitaka says that government should increase funding to Kampala to cover for such gaps and boost KCCA budget. He also adds that they are engaging with development partners to extend more funding to the Authority.
The Council has also decided that the Authority be allocated 3% of the total National Budget to cater for the needs of Kampala considering among other its status as the Capital of Uganda.
KCCA needs over 800 billion shillings but has been allocated 285.7 billion shillings for the financial year 2020/2021, 225billion from Government of Uganda and 30.56 billion shillings from Uganda Road Fund. KCCA expects to collect 110 billion shillings in non-tax revenue.