The Kampala Lord Mayor, Erias Lukwago has proposed that Kampala Capital City Authority (KCCA) considers retaining a portion of taxes and fees collected by the authority on behalf of central government as government fail to increase their budget.
Lukwago argues that in taking such a decision, KCCA would be triggering section 50(3) of the KCCA act, 2010, which reads; "the Authority may collect fees and taxes on behalf of the Government as its agent; and where the Authority acts as an agent for the Government, a portion of the funds collected shall be retained by the Authority as shall be determined by the Minister in consultation with the Minister responsible for finance."
Even though KCCA collects value taxes and fees which it retains such as property tax, fines, market dues, hotel tax, etc other taxes such as value added tax and pay as you earn are sent to the central government. Lukwago now wants KCCA to consider retaining a portion of value added tax and pay as you earn taxes. He says transforming Kampala into a modern city requires massive investment.
The Lord Mayor made this proposal while addressing council meeting at city hall today. His speech was an assessment of a year his leadership spent in office which ended last week on Tuesday.
Government slashed KCCA budget from shillings 561.33bn in the 2016/17 financial year to Shillings 337.39bn for 2017/2018 financial year. This is 1.16 percent of the 29trn budget passed last week.
The reduction affects works and roads infrastructure improvement sector which will suffer a reduction of Shillings 248 billion in the coming financial year. A number of the ongoing road constructions in Kampala are funded by the World Bank under Kampala Institutional and Infrastructure Development Project (KIIDP) phase two.
Lukwago argued that KCCA should reject government pressure that they should generate revenue to finance projects internally.
"We must guard against the temptation and pressure from central government to always focus on maximising local (retained) revenue collections to finance the KCCA transformation agenda. We must appreciate that the business community is currently struggling to break even as they are chocking on the ever soaring interest rates, rent and power tariffs," he said.
This year KCCA failed to hit local revenue targets. For instance, between July 2016 and March 2017, KCCA posted a cumulative revenue collection deficit of sh 14.3bn.
