Museveni tax ban: KCCA to lose Shs 28bn

Museveni tax ban: KCCA to lose Shs 28bn
President Museveni on a walking tour around the city. Courtesy Photo.

Kampala Capital City Authority (KCCA) could lose over Shs 28 billion should government implement a ban on all daily levies charged on informal business groups such as market vendors and taxis.

On July 22, 2017 President Yoweri Museveni wrote to the Prime Minister, Dr Ruhakana Ruganda directing that government agencies shouldn’t over tax informal sector players, saying these groups should only pay annual licenses.

The letter, is also copied to the Vice President, Finance minister, Local Government minister, minister for Kampala and Auditor General. He directed that such people should annual license fees as opposed to the daily dues. Museveni also suggested that taxi operators should also pay tax once a year.

“As far as taxis are concerned, it should again be one fee for an annual licence. Once you have that licence, you should operate without hindrance on the route for which, you were licensed for the whole year,” the letter reads in part.

Adding that “if the owner of the tax business makes profit out of his income, then the profit could be taxed…the daily taxation of operations must stop immediately.”

Museveni argued that excessive direct taxes are not correct. “Once these groups get some income, they will start spending and that is how the government will get taxes through consumption taxes,” Museveni said.

The acting KCCA deputy executive director, Sam Sserunkuma, says they stand to lose the projected Shs 28 billion from the transport sector once the president’s directive is implemented.

“We have been getting Shs 120,000 per month from taxis and we have been getting money from special hires”, he said.

On average, a taxi is charged Shs 5,000 at every stage in respective local government jurisdictions. This means that a taxi can pay up to Shs 30,000 if it were to move through six districts on a given route.

In December last year, President Museveni directed the local government ministry to harmonise these fees. In a February 2017 memo, minister Tom Butime announced the introduction of monthly parking fees of not more than Shs 80, 000 for every taxi with effect from July 1, 2017.

Sserunkuma says the Authority is also likely to lose over Shs 1.8bn that they have been collecting from professionals in the city as trade licence.

He told the KCCA council on Wednesday that court issued an injunction stopping the collections following a petition by the professionals.

Sserunkuma said that the professionals argue that since they pay licence fees to their respective bodies, they shouldn’t be paying trading licence fees to KCCA or any other government agency.

He told the council that they are still consulting the Finance Ministry on how the president’s directive can be implemented without injuring the institution’s internal revenue sources.