Boosting Local Revenue Collection in Uganda's Kayunga District Through Improved Taxation

  • July 18, 2023

  • Kayunga District, Uganda

Jenifer Bukokhe Wakhungu

Deputy Director, Local Transformative Finance


Amadou Sy

Communication & RBM Lead


Figure 3. Revenue Mobilization Committee meeting

With the help of United Nations Capital Development Fund and the International Centre for Local Democracy ,the Kayunga District in Central Uganda has seen a transformative effort to bolster local revenue collection, specifically from Local Service Tax (LST) levied on private schools.

Figure 1..Private school in Kayunga District

With administrative autonomy but limited fiscal transfers from the national government, the Kayunga District Local Government pioneered an initiative to tap potential local revenue sources to finance rising community needs.

Uganda's 1995 Constitution and the Local Government Act mandate local authorities to mobilize revenues through taxes, fees and levies to supplement central transfers. This is intended to ensure sustainable financing for local administration and development priorities. However, Kayunga District had faced chronic inefficiencies in collecting local taxes. Among local revenue sources, LST emerged as having high revenue potential but low collection rates.

To address this issue, the district local government initiated a project with two key goals: Increase LST revenue collection to boost availability of funds for local infrastructure maintenance and community needs; and improve management of fiscal data and figures to enable better tracking of collections and arrears.

The project focused on collaborating with local political leaders, private school owners and staff. Strategies included sensitization workshops with stakeholders to highlight the importance of LST collection; follow-up actions by local revenue officers for regular LST payment by schools; and incentives for schools remitting dues diligently.

These consistent engagement and follow-up strategies paid dividends, with LST collections increasing substantially from 5 million Ugandan Shillings in September 2022 to over 30 million by April 2023. The revenue mobilization mindset among stakeholders also improved. Additionally, the project enabled the district to harness fiscal data more effectively. Travel and learning visits also enhanced staff capabilities in revenue management and administration. This built confidence in the local government's ability to raise own-source revenue.

The success helped demonstrate to local leaders that latent local tax potential can be tapped to finance rising community needs. The model can inspire other local authorities to devise context-specific resource mobilization and revenue administration strategies aligned with national guidelines. For Kayunga District, the project may provide a foundation to expand revenue collection, strengthen local self-reliance and deliver effective services to citizens.