Mbarara City leaders and stakeholders are rooting for the scaling up of property tax literacy. They say this is key to the realization of tax revenue collection targets and improved service delivery.
While speaking during a civic engagement dialogue organized by RippleNami Uganda, the Mbarara City Mayor Robert Kakyebezi Mugabe noted that property tax has been a thorny issue because people have little information about it.
“People wonder what kind of tax is this, how it is assessed, what mechanisms exist for contestation, and how is this tax collected and utilized,” observed Kakyebezi during the meeting that was organized to discuss the rights of property owners, service delivery, fair and equitable taxation in relation to the collection and administration of property rates.
According to Kakyebezi, a tax literate population is key to tax revenue target realization and this lessens disagreements between tax administrators and the taxpayers. “We must use all the available avenues – including the media to raise awareness about different taxes, especially property tax,” the Mayor elaborated, adding that during tax assessment, local leaders should be involved, and property owners should be mobilized to be present and if possible, they should seek clarification from the tax assessment teams.
Kakyebezi also warned that tax assessors should be realistic and levy property tax that is consistent with the current economic trends and situation, not to push people into misery, losses, and defaulting tendencies.
As far as property tax collection in Mbarara City is concerned, Kakyebezi vowed never to allow this mandate to be tendered to private companies. “The city council will remain in charge of property tax collection. Private operators have in the past messed up revenue collection. We want an orderly system in the collection of this tax because the resources generated are utilized for service delivery and development,” he explained.
What is Property Tax?
This is a tax charged in fulfillment of the periodic statutory requirement of the Local Government (Rating) Act 2005. The money collected caters for things like infrastructure development, tax collection administration, and service delivery.
This tax is exclusively collected by local governments, with a leeway to charge from 1-12 percent on commercial properties in the area.
It is the discretion of the council to set the rate depending on different factors like location, occupancy, and income projection of the property.
Richard Mugisha, the Mbarara Deputy City Clerk reveals that the current property tax rate is 5 percent. He says that City authorities are careful during tax assessment to ensure that occupied properties are not valued at the same rate as those that are not occupied.
He explains that City residents who have grievances concerning property tax have the right to channel their concerns through area leaders but also seek redress in the property tax court which is fully constituted by the city council as stipulated in the law.
According to Mugisha, City authorities are committed to sustained public sensitization on property tax since 75 percent of the collected revenue is used for development initiatives and service delivery.
RippleNami Uganda organized this civic engagement meeting as part of the “Services and fair tax for property owners” campaign. The campaign seeks to advocate for the rights of property taxpayers to quality public services while stressing fairness, equity, reciprocity, and accountability from the Local Government.
Mbarara City Council commenced property valuation in March this year, targeting properties to be taxed in the next five years, beginning 2022/23 Financial Year. The valuation exercise is estimated to continue until early June 2022.
The property valuation exercise is being carried out by Knight Frank Uganda, with the support from USAID, as part of the Domestic Revenue Mobilisation for Development (DRM4D) project.
According to Samuel Rwakinanga Tayebwa, a revenue collection expert, property rates is an important revenue source for the city, yet it continues to exhibit gaps.
Evaluation of property rates is supposed to occur every after five years. However, in Mbarara City, it was last done in 2015 when it was still a municipality. The hope is that after the current valuation exercise, tax revenues will increase since many new property developments have taken place since Mbarara attained city status.
Tayebwa says that “equitable taxation is the cornerstone of service delivery, which every Ugandan must appreciate if the country is to go forward.”
The Services and Fair Tax for Property Owners campaign seek to engage property owners in a conversation that will deliver an effective tax sector to boost local services. Local services impact the quality of life and health of all residents. Local services also impact property values; property values tend to be higher in cities that are well planned and maintained and have access to services, and lower in cities that are lacking these qualities.
Feedback gathered before, during, and after the event will be collated into a detailed report to inform the Mbarara City Authority about gaps and opportunities in revenue generation and management of property tax, social fiscal compacts, and advocacy for increased spending based on the feedback from property taxpayers.
RippleNami Uganda is a technology company working to deliver innovative solutions to people across Africa to solve critical problems, empower nations, and provide people with real-time information to connect and create positive change.
By Cliff Abenaitwe