Councils lose billions in uncollected taxi revenue

Kampala. As taxi operators celebrate the reduction on monthly road user fees by President Museveni, urban councils across the country are losing billions of shillings in uncollected revenue from the taxi operators and parks as the presidential directive to stop daily collections from the taxi operators bites hard.

The monthly road user fees were reduced by President Museveni last Friday from Shs120,000 to Shs80,000 during a crisis meeting at State House, following uproar from taxi operators who protested the initial fees as ‘exorbitant’.
The decision caused excitement among the taxi operators and did not receive much support from the urban council leaders who say the decision was aimed at eroding their local revenue bases.

Indeed in many towns, revenues from the taxi operators and parks form the biggest single source of money generated to run the council activities.
Urban council officials now say with the lost revenue, many activities are stalling because they cannot effectively offer the much needed services.

In September this year, the Ministry of Local Government followed the directive and issued guidelines banning all the daily collections.
According to the directive, all the taxi and bus owners were only asked to pay the statutory fees charged by either the Uganda Revenue Authority or the Transport Licensing Board.

The ministry also banned the privatisation of revenue collections to private individuals, but said savings groups and associations can bid for such revenue collections.
The mandatory dues include; charges on Public Service Vehicles in particular for taxis (Shs300,000) and buses (Shs1.5m) Advance Presumptive Tax, charged by Uganda Revenue Authority on businesses that do not prepare/submit formal accounts, which is Shs280,000 for taxis and Shs1.3m for buses. Parking fees which are user charge fees for services delivered to taxi operators by urban authorities is Shs4,000 per day.

Light omnibus, licensed to carry not exceeding 20 passengers pay Shs103,400 every six months and Shs206,800 per annum, among other charges.
However, it has now emerged that municipalities, town councils and even the Kampala Capital City Authority (KCCA) have lost billions of shillings in the uncollected revenue after the directives.

Daily Monitor understands that KCCA is set to lose at least Shs16 billion this financial year.
The reduction in the taxi revenue comes at a time when the institution is grappling with funding gaps caused by the low budget of Shs338 billion that was allocated to them for this financial year, which ends in June next year.

The Authority had initially presented a budget estimate of Shs1 trillion to the Ministry of Finance.
Officials at KCCA, who declined to be named because of the sensitivity of the matter told Daily Monitor that though KCCA’s projection of taxes from taxi operators in this financial year was approximately Shs25 billion, the figure will reduce to Shs12.5 billion.

According to the statistics, KCCA has been collecting Shs2 billion monthly from the taxi operators.
For instance, although KCCA had projected to collect Shs12.3 billion for the months of July, August, September, October, November and December, only Shs2.3b was realised.

KCCA speaks out
Early this week, Mr Peter Kaujju, the KCCA spokesperson, told this newspaper that “government will have to find revenue sources to cover the gap”.
While the KCCA officials are grappling with the low revenue collection, the directive is also biting all urban councils across the country.

Several urban councils are saying as a result of the ban on collection of the daily road user fees, the councils are losing a lot and this has affected service delivering all the local government units.
Municipalities such as Jinja, Masaka, Mbale, Arua and Gulu all say they have lost revenue because of the suspension of the daily collections.

The chairperson of the Uganda Transport Development Association, Mr Mustapha Mayambala, said the move by the Ministry of Local Government is positive.
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