Kazo District councillor representing workers, Alex Mugabe Kayabuki, has urged the government to review the taxation of district councillors’ allowances, arguing that the current arrangement unfairly penalises local political leaders who receive limited remuneration.
Kayabuki says district councillors receive a monthly ex-gratia allowance of Shs250,000, which he claims is subjected to a flat 40 per cent tax rate under rules governing secondary employment.
He argues that the tax treatment is unfair, given that councillors are required to resign from public service before contesting for local council positions, as provided for under Section 129(5) of the Local Governments Act.
“If the law requires public servants to resign from their jobs before contesting for political office, the allowances they receive for serving as elected leaders should not automatically be treated as secondary employment,” Kayabuki said.
He said the current arrangement leaves councillors with limited financial support despite their responsibilities, which include monitoring government programmes, overseeing service delivery and representing their communities.
Kayabuki also questioned the difference in the tax treatment of allowances paid to district councillors and those received by councillors at lower local government levels, whom he said do not face a similar tax burden.
He called on the Ministry of Finance, the Uganda Revenue Authority (URA) and Parliament to clarify the legal basis for the differing tax treatments and consider reforms that would promote fairness among elected leaders.
“District councillors are expected to monitor government projects, assess service delivery and represent their communities, yet the allowance they receive is very small. Government should review this arrangement to ensure that local leaders are treated fairly,” he said.
Kayabuki further argued that district councillors face restrictions on certain government-related business transactions because of their leadership responsibilities and conflict-of-interest rules, limiting their opportunities to supplement their income.
He said the combination of modest allowances, taxation and restrictions on economic activities could discourage qualified individuals from seeking elective positions at the local government level.
The councillor also called for a comprehensive review of the remuneration framework for local political leaders, including consideration of reclassifying their allowances as primary employment income or introducing appropriate tax relief.
“We are not asking for special treatment. We are asking government to establish a fair and consistent system that recognises the responsibilities of district councillors and enables them to perform their duties effectively,” Kayabuki said.
He urged the government to align the tax treatment of councillors’ allowances with the legal requirements governing their eligibility to contest for political office, arguing that this would strengthen decentralisation and improve local governance.
However, the tax treatment of councillors’ allowances, the application of the 40 per cent rate and the comparison with allowances paid to other public officials and elected leaders require clarification from the Uganda Revenue Authority and the Ministry of Finance.