KCCA registers 83% tax collection decline during lockdown

Kampala , Uganda |  THE INDEPENDENT | Tax Collection in Kampala Capital City Authority-KCCA reduced by 83% in the last quarter of the 2019/2020 financial year, which covers April, May and June. According to the performance report by the Directorate of Tax Collection, the Authority collected Shillings 3.2 billion compared to Shillings19.3 billion collected in the same period in the 2018/2019 financial year.

This means the Authority failed to achieve its target of collecting Shillings 22.2 billion set for the last quarter of the 2019/2020 financial year and Shillings 100 billion for the entire financial year. Ultimately, the authority collected Shillings 78. 2 billion by March in the 2019/2020 financial year.

KCCA attributes the decline to the lockdown announced by government to contain the spread of the Corona Virus disease. Due to COVID 19, KCCA says no sensitization was conducted within the period except for bulk messages sent to 153,140 people reminding them to clear their taxes amounting to Shillings 35.9 billion. Much of this wasn’t realized.

Also, that no physical demand notices could be served to clients and yet Local revenue collections depend on field based interactions between revenue officers and clients. KCCA collects revenue from business license fees, Property rates, ground rent, street parking fees, building permit fees, local hotel tax, land fees, local service tax, advertising fees and Markets and rent fees. Of these, building permit fees yielded Shillings 478.8 million compared to the target of Shillings 622.7 million.

This was the best performing source since construction activities were not halted during lockdown. However, the revenue is still low compared to the one billion Shillings collected during the same period in the financial year of 2018/2019 Business License fees came second with a revenue turn out of Shillings 466.8 million against the target of Shillings 2.7 billion. This was also low compared to Shillings 3.9 billion collected in the same period in the 2018/2019 financial year.

Property tax, which is KCCA’s largest single source of revenue attracting over Shillings 32 billion annually this time only fetched Shillings 1.4 billion in the three months. Although it still was the largest revenue contributor, its performance was poor compared to their target of Shillings 8.7 billion. Yet still, there is a decline looking at Shillings 7.98 billion collected during the same period in the financial year 2018/2019.

Advertising fees brought in the least revenue with Shillings 15.5 million against the target of Shillings 848.2 million. Yet, in the last quarter of 2018/2019 financial year, KCCA collected Shillings 1.5 billion. The poor performance of advertising fees is attributed to the April 23rd, 2020 court ruling, which outlawed all activities relating to outdoor advertising fees collections.

Before the lockdown was declared, KCCA was performing well in tax collection. In the third quarter of 2019/2020 that ran from January to March, the Authority collected Shillings 28.85 billion against a target of Shillings 25 billion. The revenue was also higher than the Shillings 27.5 billion collected in the same period during the 2018/2019 financial year. According to the report, some revenue sources achieved beyond their target during the third quarter.

For instance, Business license fees attracted Shillings 9.3 billion against the set target of Shillings 9.2 billion, building license attracted Shillings 1.03 billion against a target of Shillings 511 million, Property rate tax generated Shillings 8.1 billion against the target of Shillings 5.4 billion while advertising fees brought into KCCA revenue of Shillings 932 million against the target of Shillings 871 million.

All revenue collected by KCCA is sent to the consolidated fund and later allocated to KCCA for spending.

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