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How Low Property Tax Compliance in Kampala affects KCCA Revenue

Kampala Capital City Authority Offices in Kampala. KCCA is working to improve tax compliance. Image courtesy of KCCA.

UGANDA – Kampala | Property rates (aka property tax) is an important source of revenue for cities like Kampala. Cities depend on this revenue to provide local services and to access financing for larger investments.

According to a recent report by The International Growth Center, Kampala Capital City Authority (KCCA) has made significant improvements in increasing the tax base in Kampala. Since 2014, the KCCA has performed mass enumeration of properties in the city, collecting ownership information, GIS coordinates, and property attributes for over 300,000 properties.

Despite these tax base widening measures, 66% of the revenues remain uncollected. This is because of poor tax compliance.

Tax compliance refers to taxpayers’ willingness to comply with tax laws and regulations by paying tax timely and accurately.

According to the report, several factors may contribute to low property tax compliance, including:

The International Growth Center’s detailed study explored these potential factors for low property compliance, by assessing KCCA administrative tax data and focus groups with taxpayers. Below were the findings:

Factors related to low property tax compliance in Kampala

While also considering the COVID-19 impact on the economy, the report notes the following factors related to low property tax compliance:

“Show us love, we shall also pay taxes with love,” the International Growth Center quoted one taxpayer as saying.

“Our money is just taken, but we are not sure how it is spent,” The International Growth Center quoted one respondent.

Proposals to Improve Property Tax Compliance:

“It is disrespectful for KCCA not to work with local leaders,” the report quoted another taxpayer as saying.

KCCA has proposed improvements in communication, education and relationship management, which should go a long way in raising property tax revenues in Kampala.

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