Enhancing property tax compliance in Kampala

Policy brief 25 Jan 2021 Cities

Authors

Property taxes are an important source of revenue for Kampala Capital City Authority, making up over 30% of own source revenues in 2018/191. Recent reforms to collect data on all properties in the city have expanded the tax net considerably.
Now that the tax net has been expanded, the city faces a new challenge – raising compliance with property taxes. Currently, property tax compliance is low; 12% of billed properties had taxes paid on time in FY 2019/20. This is in part due to delays in valuation rolls for three divisions and the onset of the COVID-19 pandemic.
There is a wide variation in compliance depending on geography, property value and property use, with compliance highest for higher value properties in the city.
Evidence from taxpayer consultations suggests low compliance may be driven by a number of factors – most notably high tax liabilities, limited credibility of enforcement, poor relationship management between KCCA officials and citizens, misinformation, and weak linkages between taxes and service delivery. These discussions with taxpayers highlight a number of areas for further study.