Uganda embraced decentralisation as a system of governance in the early 1990’s. The success of decentralisation was pegged on the capacity of the local governments to mobilise their own revenues in order to fulfill their responsibilities.
Before its suspension in 2005 and eventual abolition in 2008, graduated tax constituted a dominant source of local revenue. Although Local Services Tax (LST) and Local Hotel Tax (LHT) were introduced to fill the funding gap left by the abolition of graduated tax, their yield remains significantly low. Consequently, local governments are still heavily dependent on central government funding – a position that undermines their autonomy. Property rates, a form of property taxation, have emerged as a key source of local revenue. Property rates provide a stable and sustainable source of revenue for local governments, partly driven by urbanisation. Summary of ATAP Working Paper 13 by David Bakibinga and Dan Ngabirano