The acting Executive Director of Kampala Capital City Authority, Eng. Andrew Kitaka, has described as impractical the Lord Mayor’s proposal to lower the property tax rate.
Previously, KCCA has been a blanket property tax rate of 6% but during Monday’s council meeting, Lord Mayor Erias Lukwago proposed that the tax be levied depending on one’s ability to ensure more compliance.
Mr Lukwago proposed that landlords with properties that have rent-able value of between 5m-20m shillings be subjected to a 3% tax, those whose value is above Shs20m 5% and those below 5 million be asked to pay a 0.1% tax instead of a blanket levy of 6%.
However, Mr Kitaka, in an interview said the proposal is bound to create chaos as there will be deliberate undervaluing of property by landlords so as to dodge the tax.
The decision came after the KCCA council resolved to write off the property tax debt worth Shs44 billion.
The tax arrears accumulated from 2005 to 2016.
Ms Doreen Sabuka, the Chairperson KCCA Revenue Standing Committee, suggested that the arrears be waived off.
On May 3, 2019, the KCCA council through its Revenue Standing Committee wrote to the Kampala Minister, Ms Beti Olive Kamya seeking guidance on the matter.
In her July 11th, 2019 response, Ms Kamya said that if the Authority failed to collect the property rates by issuing demands notices or invoices through neglect or any reason, it might be difficult to compel them to pay interest and arrears.
“I think that is within the Authority’s jurisdiction to waive both arrears and interest on arrears, if accrual was through no fault of property owners,” Ms Kamya said.
According to the Local Government (Ratings) Act 2005, KCCA was meant to have collected the money within a period of six years. The law empowers KCCA to collect tax directly from tenants if the property owner declines to meet their tax obligations.