LOCAL GOVERNMENT RATING ACT (2005) AND PROPERTY TAX COLLECTION MAXIMIZATION IN URBAN UGANDA

Abstract

PURPOSE: Tax rating instruments play a vital role in determining the level of tax collection maximization. In Uganda for example, the Local Government Rating Act (2005) is the tool used by local government authorities to execute their duties; tax administration and enforcement. Thus; this study examined the effectiveness of Local Government Rating Act (2005) on the property tax collection maximization in Wakiso District, Uganda. The key areas of interest in the Local Government Rating Act (2005) that have been examined in this study included property tax coverage and tax administrative costs while tax collection maximization is determined in terms of revenue inflow and compliance.DESIGN/METHODOLOGY: Causal research design and linear multiple regression as the underlying statistical tests was employed. The sample size was 48 tax administrators and this was determined from target population of 55 through Sample Size Determination by Krejcie and Morgan (1970). Close-ended questionnaires and interview guides were used as data collection techniques. The validity and reliability of research instruments was determined using Content Validity Index and test and pretest respectively. Data analysis and processing was done through SPSS where frequencies, percentages, mean value, correlation and regression matrixes were employed.RESULTS: This study found out that Uganda’s Local Government Rating Act (2005) remains ineffective as it makes property tax coverage very limited; and the administrative costs are generally high. The study also found out that property tax inflow and compliance as elements of property tax collection maximization are relatively low in Wakiso District. Ineffectiveness in LGRA as regards to property tax coverage and administration costs was found to be closely associated with low tax collection maximization in the District. The result is that the property tax collection of the district remains minimal and there are always deficits as the district fails to achieve planned revenue targets.PRACTICAL IMPLICATION: Better accessibility and utility of socio-economic services is key and paramount to all property owners especially in urban areas. To ensure that property owners enjoy the best of these services, local governments need to improve on socio-economic infrastructure development. This requires high levels and equitable tax collection maximization covering the areas of property tax collection maximization. In this regard, the recommendations in this study will be significant to the local governments such that they can enhance tax planning, control and bridge the existing gaps in the LGRA, thus, improving the revenue collection maximization; the recommendations will also help to reduce cases of unfair assessment that sometimes affect compliant taxpayers.