Uganda: Local Govts Post Shs200b Shortfall in Property Tax, Rental Fees

30 November 2020

Local governments have registered a revenue shortfall resulting from failure to collect property tax and rental fees, according to Local Government Minster Raphael Magyezi.

The failure, Mr Magyezi said, was occasioned by the closure of a number of business premises and markets for about four months due to Covid-19-related restrictions.

Speaking during the closure of the Economic Mkutano 2020 in Kampala last week, Mr Magyezi said the shortfall will be a big dent in service delivery, especially for local governments.

Uganda, just like any other country, is experiencing revenue shortfalls due to decline in economic activities and international trade.

"The Shs200b revenues have been hit by Covid-19 because some businesses and markets are closed, so local government authorities cannot collect property tax and rental fees," he said, noting local governments would be looking at the central government to fund the deficit in order to provide required service.

However, government has indicated it might experience revenue shortfalls in the 2020/21 financial year due to a drop in economic activities.

Already, government has indicated the economy will contract to less than 3 per cent due to the impact of Covid-19-related restrictions.

Mr Magyezi also urged local governments, together with the central government to hasten drawing up the Agency and Royalty Legal and Regulatory Framework, which will provide for sharing of taxes and royalties collected from national resources such as minerals and forests, among others.

He also noted that new cities had been established before approval of funding, which means they will continue to depend on local government budgets until the next financial year in which there will be a provision for funding from the central government.

The Economic Mkutano, which is an annual event, discusses ways to improve the economy through established structural entities such as local governments.

The two-day event this year focused on improving service delivery through local governments.

Mr David Bikhado Ofungi, the Economic Mkutano organising chairman, said challenges of local governments could be worked on through public private partnerships as well as innovating ways through which they can boost revenue collection.

Structures

According to Ms Elizabeth Kasedde, from Stanbic Bank, there is need to strengthen the capacity of local governments to have the right structures in place so that they can develop bankable projects to attract financing.

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