Property tax reforms : a tool for improvements in urban services delivery. The case of Kampala City Council, Uganda

This study report is addressed to the academia, researchers and local governments interested in understanding how property tax systems can be rejuvenated in order to make it a sustainable source of revenue to finance delivery of urban services. The study is motivated by my own desire to understand local government's revenue generation in Kampala City Council. It is my first attempt to investigate local government's revenue. The ultimate goal of the study is to analyze how property tax system works and describe how it can be improved to enable local governments meet their obligation of service provision. Understandably, Local governments all over the world are struggling to raise local revenues to enable service delivery but face enormous challenges in their effort. Cities, Local governments or urban authorities are privileged repository of most valuable real estates in many countries including Uganda. Although they are not necessarily the owners, they have a higher propensity to benefit from these properties within their jurisdiction. These properties are not only a sign of improved urban welfare and standard of living but are a reflection of urban wealth from which local governments must capitalise on. A tax on property is therefore seen as the most stable of all local government taxes and relevant to service provision. In essence it is the best option of sharing the burden of service provision between the public themselves and local authorities on the other hand. However, to reach at a level where the demand for urban services is met by delivery of those services a systematic and functional property tax system must be put in place and must be well administered. This study analyses and describes a number of challenges that Kampala City Council face in pursuit to administering property tax. The study also proposes a number of reforms to address the impediments, which were confirmed through the fieldwork. The focus of this study is NOT how to finance urban service delivery but how property tax (as a source of income) can be rejuvenated and used as a stepping stone to widen the delivery of urban services. The study observes that most challenges are at both policy and administrative levels where failures have been identified. The study proposes a number of reforms to address the failures especially taxpayer services - requiring fiscal and physical accountability. The study proposes the creation of a CISS as a model on how property tax information inadequacies can be addressed. The study observes that these reforms may not be easily implemented because of existing realties such as a huge backlog of undelivered urban services. The study concludes that, if Kampala had an operational and adequately managed property tax system; it would generate enough revenues to cater for the required urban services. Additionally, the thesis supports the argument that the major bottlenecks such as collection lags, poor enforcement mechanisms, political interferences, corruption and failures in taxpayer service delivery undermine property tax returns. The study recommends that property tax system must operate as a complete system, which does not only capture resources but also serves individual and society's interest. That is why reforms must address accountability and service provision as a key priority.