Kampala, Uganda | THE INDEPENDENT | The new property rates proposed by Lord Mayor Erias Lukwago shall cost Kampala Capital City Authority –KCCA 30 billion shillings. This is according to the Ag Executive Director Andrew Kitaka.
According to Lukwago’s proposal, property owners with a taxable value below five million should be exempted from tax, those between five and 20 million shillings will pay 3% while those above 20 million shillings are taxed at 5%.
According to the Local Government (Rating) Act, property tax is calculated between 6 to 12% of the rateable value. The rateable value is 74% of profit from a rentable property.
Kitaka told KCCA councillors on Wednesday that KCCA would lose up to 30 billion shillings out of the 53 billion shillings they expect to collect in property tax in financial year 2019/2010.
KCCA anticipates to collect about 112 billion shillings from all taxes this financial year. Property tax is the highest contributor. Kitaka told the councillors that the reduction of 30 billion shall be a big set back to the Authority.
He says it would affect allowances for councillors, road constructions and drainage maintenance and travels among others.
Specifically, on road maintenance, Kitaka says that they would have no funds since the World Bank that has been funding the constructions through Kampala Institutional Infrastructure Development Project (KIIDP) wants to pull out.
Kitaka adds that already KCCA feels the pinch resulting from the 100 billion shillings in property arrears that were recently written off by the council. KCCA’s budget stands at around 502 billion shillings for financial year 2019/2020.
Lukwago noted the setback KCCA is likely to suffer in case the proposal is passed although he still stands by his proposal. He argues that the low earning property owners in Kampala should be exempted from tax and that central government fully funds KCCA.
He says KCCA is established under central government different from other Local Governments.
He asked the standing committee in charge of Revenue Collection to meet with the Minister for Kampala and table to her the proposal and also explore ways through which the 30 billion gap can be covered.
Lukwago further expressed readiness to cut KCCA budget to support his proposal and cover the 30 billion shillings gap in case the central government declines to increase funding.
The committee has until the next council sitting scheduled for 29th August to present a report after meeting the Minister.