Alice Lubwama
30 August 2007
ANY gainfully employed person who earns at least Shs1 million will pay Shs100,000 worth of Local Service Tax per year if the new Local Governments (amendment) Bill is approved in its present form.
The draft law, which was introduced to Parliament yesterday by the State Minister for Local Government, Ms Hope Mwesigye, will replace the Graduated Tax that was scrapped in 2005.
The Bill, which will amend the Local Government Act, seeks to provide for additional taxes to be collected and charged by local governments, including the Hotel Tax. Those who earn between Shs200,000 to 300,000 monthly will pay Shs10,000 yearly. And people who earn between Shs300,000 to Shs400,000 will pay Shs20, 000; between Shs400,000 to 500,000 will pay Shs30,000; Shs500,000 to 600,000 will pay Shs40,000; Shs600,000 to 700,000 will pay Shs60,000; 700,000 to 800,000 will pay Shs70, 000 and 800,000 to 900,000 will pay Shs80,000.
Artisans who are self employed and earn between Shs200,000 and Shs300,000 will pay a Local Service Tax of Shs10,000 and those who earn more than Shs300,000 will pay Shs20,000 every year. Previously, artisans were paying between Shs3,000 to Shs150,000 as Graduated Tax and persons in gainful employment, earning at least Shs1million, were paying Shs100,000.
The draft law exempts police officers, people who work in prisons and the army.
However, it is not clear how one's income will be accessed, but the tax for salaried employees will be paid by their bosses in four installments and the rest of employees will pay at once as they pay for their trading licence.
The Bill provides for a tribunal where taxpayers will appeal in case one feels he/she is over assessed. Defaulters will be required to pay a surcharge of 50 per cent on the monies that are unpaid at the end of the first four months of a financial year, according to the Bill.
The Hotel Tax, if passed by Parliament in its present form, will require hotel and lodge proprietors to charge their customers' extra money for accommodation per night. Five and Four star hotels will charge their customers $2, while for those that charge Shs50,000 and more, their customers will pay Shs2,000. For hotels that charge between Shs10,000 and Shs50,000, customers will pay Shs1,000.
According to the Bill, the proposed Hotel Tax will be collected by the managers on a monthly basis and they will remit the money to the relevant local council. The taxes collected from accommodation will be used by local governments for general cleaning of the urban areas.
The Local Service Tax will be spent on local services such as sanitation, education and construction of roads. Commercial farmers will also be required to pay the Local Service Tax. Farmers who have five and more acres of banana and coffee plantations will pay Shs50,000 every year.
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