The Kampala Capital City Authority KCCA Executive Director, Jeniffer Musisi has asked Kampala Minister, Beti Kamya to rescind Authoritys resolution of reducing property rates from 6 to 4 percent. Musisi in a letter dated 5th July 2018, argued that the councillors resolution was unlawful and untenable.
The KCCA council on May 23rd, 2018 amidst protest from the technocrats passed a resolution to reduce property rate from 6 to 4 percent. According to the Local Government (Rating) Act 2005 that provides for property rates, KCCA is required to attach a value on the properties depending on revenue that the owner generates from it annually.
Local government units can charge between 6 and 12 percent of a property's rentable value. The rentable value which is calculated from 76 percent of the property value while the remaining 24 percent is left for the property owner to cater for utility bills and property maintenance.
KCCA has pegged its property rate at 6 percent since 2006. But last year, KCCA embarked on a process to review the property value. A new valuation roll for Central Division was accomplished last year and its revised charges effected at the start of 2017/18 financial year.
As councilors discussed the 2018/19 financial year KCCA budget, they voted to reduce the 6 percent rate that had for instance been based on the updated Central Division valuation roll.
Musisi in a letter dated 5th July 2018, argued that the councilors' resolution was "unlawful and untenable."
In 2016, Musisi says World Bank extended a loan facility to KCCA of 183.75 million US dollars under the second Kampala Institutional and Infrastructure Development Project (KIIDP) to support infrastructure developments in the city.
World Bank, Musisi further says extended a 3.2 million US dollar to KCCA to bolster revenue collection. "A major component of this loan was to embark on property valuation and to automate the process of revenue collection," she says.
Musisi says it was projected that KCCA revenue would grow by 15 percent. She says KCCA anticipates to use the revenue to finance initiatives such as maintenance of roads and street lights.
"KCCA has already utilised part of the fund (World Bank money) and the properties in Central Division have been valued," Musisi says. "The valuation of properties and the handling of all objections by the Valuation Court has led to the realisation of a rentable value of UGX 19 billion (in Central Division) out of which 13 billion has been collected," Musisi further says.
When councillors voted to reduce the property rates, they argued that 6 percent was high but Musisi says municipalities surrounding Kampala charge a rate of between 7 and 10 percent which is higher that of KCCA.
"We therefore request that you direct that the resolution of the Authority meeting held on May 23rd 2018 to reduce property rate from 6 percent to 4 percent of the rentable value of a property in Kampala City is illegal and of no effect," Musisi says in the letter to Kamya.
But Lord Mayor, Erias Lukwago says councilors stand by their decision to reduce property rate to 4 percent because Kampala residents are chocking on taxes. If KCCA wants councilors to retain 6 percent, Lukwago says it should abolish certain payments such as fees for garbage collection that residents pay on top of property value.
Lukwago further argues that Musisi has refused to put in place a special account where property rates are supposed to be deposited so that the money can be invested in the area to finance development infrastructure. The 13 billion collected from Central Division, for instance Lukwago says should have been invested in the Division.