UGANDA, Masaka | Real Muloodi News | Masaka City Council is struggling to meet its property tax collection targets due to the high number of commercial property owners who default rate on their property rates obligations.
With a significant shortfall in local revenue collections, the city council treasury is finding it difficult to generate the required revenue to run its operations and deliver much needed services to Masaka City residents.
Last year, Masaka City Council conducted a property valuation assessment to update the evaluation roll for the purposes of levying property rates, otherwise referred to as property tax. The assessment indicated that 20,061 buildings in the area are eligible for paying property tax.
The tax is charged on immovable properties that are commercially managed, such as schools, hotels, rented houses, rented shops, and factories.
The city had projected to collect at least USh2.5 billion in each financial year if property owners complied with their obligations by contributing a 5% tax on the value of their property to the city treasury.
High Property Tax Default Rates
According to Michael Mulindwa Nakumusana, the Nyendo-Mukungwe Division Chairperson, the majority of property owners are not meeting their property tax obligations, which has contributed to a significant deficit in local revenue collections in the city.
He notes that the city’s tax mobilisation teams are struggling to locate many of the property owners and serve them tax evaluation notices. Mulindwa explains that most of the defaulting properties are owned by landlords who do not live in the area, and the current occupants are hesitant to help the tax collection teams locate the real proprietors.
The city only raised USh965 billion out of a projection of USh2.1 billion in property tax in the last financial year, according to the budget performance report.
To address the issue, Mulindwa states that the City Council has generated a list of properties that have consistently defaulted on their tax obligations for a long time.
Besides publishing the list of defaulters, he says the city is also considering using the courts of law to help recover the taxes.
Florence Namayanja, the Masaka City Mayor, notes that as the political leadership, they have taken it upon themselves to mobilise tax compliance in their respective electoral areas to support the city to generate the required revenue to run its operations.
However, Edward Lutaaya, the Chairperson of Masaka City Property Owners Association, partly blames the apparent default rate on the ruthlessness of some members of the tax mobilising team who are tough on landlords. As a result, they chose not to pay the taxes.
He has challenged the City Council authorities to hold a mutual engagement with the association of property owners to agree on affordable property rates and how to schedule the payments, rather than choosing to use the court process, which will incur high costs.
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