Local governments, Shs1 trillion revenue target, Uganda local revenue, Local Government Finance Commission, Mariam Nalubega, Adam Babale, own-source revenue, local revenue mobilisation, fiscal decentralisation, Local Service Tax, property rates, PAYE, Uganda Revenue Authority, IRAS, digital revenue collectionThe Local Government Finance Commission has projected that local governments across Uganda can raise up to Shs1 trillion annually in own-source revenue by the 2028/29 financial year.
The figure is more than doubling current collections through improved tax administration, digitalisation and stronger enforcement.
Mariam Nalubega, vice chairperson of the commission told journalists on Tuesday, ahead of the inaugural Local Revenue Mobilisation conference scheduled for October 15, 2026, at Hotel Africana's Nile Hall in Kampala that local governments have considerable untapped revenue potential and could increase collections by improving the administration of existing revenue sources rather than relying solely on transfers from the central government.
“We have profiled those sources and we know that these local governments can collect to a tune of shs1 trillion,” Nalubega said, explaining the basis of the commission’s projection.
She added that the commission expected local authorities to make better use of their revenue-generating capacity by addressing weaknesses in collection systems, improving compliance with existing laws and ensuring that taxable activities were properly recorded.
The commission’s reported figures indicate that local government collections have increased from about Shs257 billion to Shs442 billion following measures intended to strengthen revenue administration and introduce digital collection systems.
Specifically, the Local Government Finance Commission oversees the Integrated Revenue Administration System (IRAS), which supports support local revenue collection and administration.
Nalubega said the increase demonstrated the potential for further growth, although reaching the Shs1 trillion target would require sustained improvements in revenue mobilisation and management.
“We are now at shs442 billion, and that is not how we found it. We found it much below shs257 billion . With these innovations, with these measures and the digitalising of local revenue, you can see that now the revenue is shooting high,” she said.
The commission believes additional revenue could be raised from Local Service Tax, property rates, market dues, trading licences and other sources administered by local authorities.
Adam Babale, secretary to the commission, said local governments are collecting less than 20 per cent of their estimated own-source revenue potential, pointing to gaps in taxpayer registration and the administration of property rates.
“In fact, even the current performance, we place it at less than 20 per cent of the potential, and the reasons are there,” Babale said.
He cited a preliminary review comparing Uganda Revenue Authority's Pay As You Earn records with local government Local Service Tax registers as an indication of the possible gaps.
“Just a preliminary review of the Pay As You Earn register at URA indicates that there are over 63,000 people who are remitting Pay As You Earn. But when you go to the local government register, there are less than 12,000 people contributing to Local Service Tax,” he said.
Babale argued that the difference warranted closer examination by local authorities to establish whether eligible taxpayers were being identified and assessed appropriately.
“That already shows you that there is a huge Local Service Tax potential that is not utilised,” he said.
However, the two figures do not necessarily represent identical taxpayer populations. PAYE and Local Service Tax have different eligibility requirements, meaning the discrepancy alone does not establish that all individuals on the PAYE register are liable for Local Service Tax.
The commission has also identified property-rate administration as an area where local governments could increase collections.
Babale said property registers in some local authorities did not adequately reflect commercial buildings being developed in urban areas, potentially leaving some properties outside the valuation and assessment process.
“Their property-rate registers are understated. Every day people are constructing commercial buildings in town, but these buildings are not in the property valuation list for local governments for property-rate purposes,” he said.
The commission's position is that regularly updating property records and identifying taxable properties could widen the revenue base without necessarily introducing new taxes.
Market management is another area Nalubega believes requires attention. She said some organised markets were underutilised as traders continued operating along streets, creating challenges for urban management and revenue collection.
“We go to the market, the markets are empty, people are trading on the streets, dumping garbage everywhere, and yet the markets are there, very organised, very modern,” she said.
Nalubega argued that local governments needed to enforce existing regulations while ensuring that organised markets were effectively used.
“If we enforce all this and the local governments take charge of their potential, one trillion will be fetched from the local governments,” she said.
Officials also pointed to political interference as one of the challenges affecting local revenue mobilisation, adding that capacity building for elected leaders was as important as training technical staff.
“The frontline work we do at the commission and the technical department of local revenue is to do capacity building for local governments every quarter. Every week we are doing sensitisation and capacity building on the laws because we discovered that most local government staff engaged in revenue mobilisation do not understand the law,” Fred Andema, senior manager for revenue and research at the commission said.
He said the commission also engaged political leaders to help them understand their responsibilities in revenue mobilisation.
The conference
According to officials, the forthcoming conference on October, 15 at Hotel Africana in Kampala will bring together local governments, ministries, development partners and other stakeholders to discuss revenue performance, identify weaknesses and consider reforms aimed at improving collection and administration.
It will be held under the theme; Strengthening Local Revenue Mobilization for Sustainable Fiscal Decentralization and Improved Service Delivery.
During the conference, the best performing local governments in recognise local in collecting and managing revenue, particularly those that had channelled collections into service delivery will be awarded.