Local government releases guide on property rates
Oct 31, 2007
SO many questions have been asked about the property tax. Many people think they are being unfairly taxed by the local governments and as a result, they have refused to pay. The Ministry of Local Government has, therefore, released a booklet answering various questions on the tax.
By Joshua Kato
SO many questions have been asked about the property tax. Many people think they are being unfairly taxed by the local governments and as a result, they have refused to pay. The Ministry of Local Government has, therefore, released a booklet answering various questions on the tax.
Local governments are valuing, assessing and collecting rates on properties basing on the Local Governments (Rating) Act, 2005, which became effective on November 1, 2005. The act empowers local governments to levy rates on property within their areas of jurisdiction.
However, property rating dates back to 1948 when the first valuation list was compiled in Kampala.
Prior to 1972, property rates were mainly paid by Asians in Kampala and other municipalities. However, the expulsion of Asians in 1972 left their property in the hands of locals who continued paying the rates.
In 1979, the Local Government Ratings Decree was instituted. It was, however, replaced with the 2005 Act. Property rates are potentially a major source of local government revenue. They represent at least 14% of total revenue collection in many urban areas.
In the booklet, rate payers will know how the rates are levied, valuation is done, rates are calculated and payment made. In addition, they also gain knowledge about their rights and responsibilities in relation to property rates.
The booklet illustrates the first and last steps of property tax collection.
“The requirement is that at least 75% of these rates collected be used on road construction, garbage collection and anti-malarial drugs,†the document reveals.
The book specifies that only commercial properties and residential houses that are rented out by owners are subject to the rates. Residential houses that are occupied by their owners and families are not rated. However, before the 2005 amendments, every property in a given locality was rated.
Other properties that are exempted from the rate include cemeteries, places of worship, residences of religious leaders, official residences of the President and traditional leaders and public out-door sports/recreation facilities. Contrary to what some people think, being a widow, unemployed, sick or very old cannot exempt you from paying the rate. Even when a house does not have tenants, the owner is supposed to pay the rate. But one can appeal to the tribunal for a reduction on the rate.
According to the book, local governments have powers to set a rate not exceeding 12% of the rateable value and a minimum of sh2,000 per rateable property. But the Act gives local governments the discretion to decide how much a given property should pay, if the rate is between 1% and 12%.
After determining the gross value of the property per year, a net value is then determined after deducting 22% from the gross. The rate payer should be given ample time to either query the amount levied on his property or accept it. On acceptance, he should be given ample time to pay.
This booklet is a must-have for all local governments. It can be obtained from the Ministry of Local Government at Workers House in Kampala.
SO many questions have been asked about the property tax. Many people think they are being unfairly taxed by the local governments and as a result, they have refused to pay. The Ministry of Local Government has, therefore, released a booklet answering various questions on the tax.
Local governments are valuing, assessing and collecting rates on properties basing on the Local Governments (Rating) Act, 2005, which became effective on November 1, 2005. The act empowers local governments to levy rates on property within their areas of jurisdiction.
However, property rating dates back to 1948 when the first valuation list was compiled in Kampala.
Prior to 1972, property rates were mainly paid by Asians in Kampala and other municipalities. However, the expulsion of Asians in 1972 left their property in the hands of locals who continued paying the rates.
In 1979, the Local Government Ratings Decree was instituted. It was, however, replaced with the 2005 Act. Property rates are potentially a major source of local government revenue. They represent at least 14% of total revenue collection in many urban areas.
In the booklet, rate payers will know how the rates are levied, valuation is done, rates are calculated and payment made. In addition, they also gain knowledge about their rights and responsibilities in relation to property rates.
The booklet illustrates the first and last steps of property tax collection.
“The requirement is that at least 75% of these rates collected be used on road construction, garbage collection and anti-malarial drugs,†the document reveals.
The book specifies that only commercial properties and residential houses that are rented out by owners are subject to the rates. Residential houses that are occupied by their owners and families are not rated. However, before the 2005 amendments, every property in a given locality was rated.
Other properties that are exempted from the rate include cemeteries, places of worship, residences of religious leaders, official residences of the President and traditional leaders and public out-door sports/recreation facilities. Contrary to what some people think, being a widow, unemployed, sick or very old cannot exempt you from paying the rate. Even when a house does not have tenants, the owner is supposed to pay the rate. But one can appeal to the tribunal for a reduction on the rate.
According to the book, local governments have powers to set a rate not exceeding 12% of the rateable value and a minimum of sh2,000 per rateable property. But the Act gives local governments the discretion to decide how much a given property should pay, if the rate is between 1% and 12%.
After determining the gross value of the property per year, a net value is then determined after deducting 22% from the gross. The rate payer should be given ample time to either query the amount levied on his property or accept it. On acceptance, he should be given ample time to pay.
This booklet is a must-have for all local governments. It can be obtained from the Ministry of Local Government at Workers House in Kampala.