UGANDA, Mbarara | Real Muloodi News | Local property owners met with Mbarara City officials on Monday to discuss issues around the management and collection of property rates, as well as the services property taxpayers can expect from city officials from the resulting tax revenues.
Mbarara City officials have projected that the collections from property rates (property tax) will amass USh10 billion in the next financial year. Officials projected this figure during the Mbarara City “Services and Fair Tax for Property Owners” Civic Engagement Event, which took place on the 23rd of May at the Acacia Hotel in Mbarara City.
The event was organised by RippleNami Uganda, with the support of USAID, as part of the Domestic Revenue Mobilisation for Development (DRM4D) project.
DRM4D is also supporting city officials to carry out a property valuation exercise throughout Mbarara City which began in March, targeting services to be tax over the next 5 years, beginning in the next financial year. It is as a result of this exercise that city officials are basing their revenue projections.
Concurrently, Real Muloodi News is leading a public education campaign to empower Mbarara property taxpayers with knowledge of their rights to service delivery and fair and equitable taxation when property rates are collected and administered by their local government.
What Mbarara City Property Owners Had to Say
Commercial property owners in Mbarara City asked the Mbarara City Authority to organise more sensitisation campaigns around property rates.
Mr Damazo, a guesthouse owner in Mbarara City, said that the local government must ensure that property tax education and information is well disseminated to the public if they expect compliance.
Enid Kobusingye, Chairman LCI Kafunjo cell in Mbarara City North and a property owner, expressed her worry on grounds that Mbarara City has areas that are still in a remote setting and cannot easily understand property tax.
“If these people in charge don’t go to those areas and sensitise our people, because I see even those who are in the central business district are also confused about the tax, how about us who are new in the city?” asked Ms Kobusingye.
Mr Kamuhanda, a prominent Mbarara property owner, agreed that it is essential to educate people about property rates, their purpose, and the differences between property rates and rental income tax.
“Some valuers are arrogant. It’s not enough to say that you are from the council. You need to ensure that you are well conversant with the law so that by the time you go to the owner, you can explain the law, the taxes, and their purpose, ” Mr Kamuhanda said.
Some of the property owners questioned whether rental income tax and the local government property rates tax is double taxing.
This prompted clarification from Mbarara City Deputy Town Clerk, Richard Mugisha, that rental income tax is a tax on the money you earn from the lease of property, paid to the URA. Whereas property rates is a tax on the value of your commercial property, paid to the Local Government; it is not a tax on the income from you earn from your property.
Mugisha further explained that the revenue from rental income tax contributes to the national budget, and to things like paying the national debt, whereas the revenue from property rates contributes local government’s budget and to spending on services at the local level. Local services include things like city planning and management, road construction and maintenance, street lights, sanitation and clean water.
Some property owners expressed that they felt over-taxed. Mr Damazo said, “We’ve been used to paying a trade license fee to the local council. Then came property tax, then rental income tax, then the local security tax, and the hotel tax. We feel that the taxes are high, and we as property taxpayers, do not see the benefit of the tax we pay.”
A major concern amoung property taxpayers and their LC1 representatives was the state of disrepair of many of the roads in Mbarara city.
Mr Basiime Francis, LC1 of Kiswahili Cell and representative to the residents in his area, said, “Development is based on tax. “Local governments should invest more in educating people about property taxes because the majority of those who are paying property taxes don’t know why they are paying that tax.”
Also speaking at the event was Mr Tuhame Enos, the Representative for People Living With Disabilities (PWDs), Mbarara City.
Mr Tuhame explained that “as much as public services like water is available for us all, some PWDs cannot access these services and it becomes expensive for them to use these services, like in cases of distance.”
He added, “Legislators should set aside a small percentage of the revenue collected for tools and equipment to be used by the vulnerable groups to facilitate service utilisation.”
What Mbarara City Officials Had to Say
The Lord Mayor of Mbarara City, Mr Robert Mugaba Kakyebezi, explained that property rates is not a new tax, it has always applied to commercial properties in Mbarara, even before the municipality was elevated to city status. However, there has been a surge in the number of buildings that have come up in the last few years, therefore a number of them have never been subjected to property tax before.
The current valuation exercise taking place in Mbarara city will address this, explained Mayor Kakyebezi. This will ease the burden on the existing taxpayers that are shouldering the responsibility of contributing to city budgets that fund public services, he added.
Mayor Kakyebezi assured property owners and residents who attended that the money collected would be used to buy a brand new grader to help create new roads, as well as repair and improve the existing ones. He also pledged that repairs and servicing will be made to street lights.
Richard Mugisha, Mbarara City Deputy Town Clerk, explained that 25 per cent of the money collected from property rates is for administration and 75 per cent is goes towards providing public services.
Mr Mugisha further explained that the money collected cannot cater for all the services, so they plan to prioritise some like the roads. Therefore, the current the garbage collection fee in Mbarara City will continue to be collected from property owners, independent of property tax.
Samuel Tayebwa, head of Revenue at Mbarara City Council, told the stakeholders that USAID sponsored a sensitisation and evaluation exercise to ensure that by the time the city administration put out rates, every property owner understands what transpired and is aware of their right to quality service delivery.
“As you know, City Council has been carrying out sensitisation campaigns, but RippleNami found it prudent to create a platform for the stakeholders and building owners to interface with authorities and voice their (building owners) input in the exercise” said Tayebwa.
Deputy City Clerk Mugisha assured the building owners that they are going to keep explaining to the parties concerned to ensure that they move at the same pace before property tax collection commences next financial year.
Mayor Kakyebezi added, “Let property owners know right from the start what they need to do concerning property valuation and appeal before the tax is put in place.”
“When the valuation list is out, go and see how much it is and assess the valuation of your property,” he urged property taxpayers in the city.
Mr Mugisha also explained that if a property owner is unable to pay the tax in full, he can explain to the local council leaders, who can grant him a grace period to pay in two equal instalments under the law.
The discussion was part of the “Services and Fair Tax for Property Owners” campaign that seeks to advocate for the rights of property taxpayers to quality public services while stressing fairness, equity, reciprocity, and accountability from local government and how property rates are managed.
Watch the Full Mbarara City Civic Engagement Event Below
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