Taxing Vacant Land: A Bold Step Toward Equity and Growth

Uganda’s urban centers, especially Kampala, face a growing dilemma. Cities are expanding, housing demand is soaring, yet vast tracts of land remain idle. This underutilized land hinders economic growth, fuels inequality, and stalls urban development. Taxing vacant urban land could be a transformative step, providing a pathway for equitable urbanization, optimized land use, and increased public revenue.

The Urban Land Challenge

Urbanization is reshaping Uganda, with Kampala contributing over 10% of the national GDP and hosting nearly 1.5 million people, a number that doubles during the day. Despite this growth, an estimated 8%–10% of prime urban land in Kampala remains undeveloped. This excludes derelict buildings, abandoned properties, and oversized plots attached to underused structures.

Speculative landholding is at the heart of this issue. Owners hold idle plots in the hope of future price hikes. In neighbourhoods like Civic Centre and Kololo I, some plots measure as large as 27,000 square meters, far exceeding the average developed plot size. This inefficiency exacerbates the housing crisis, making it harder for Kampala to evolve into a compact, well-planned city.

Uganda’s Local Government (Rating) Act currently taxes only developed land, leaving vacant land untaxed. This loophole deprives local governments of vital revenue and encourages speculative landholding, which drives up property prices and creates artificial scarcity.

Why Uganda Needs a Vacant Land Tax

A vacant land tax offers multiple benefits:

1. Revenue Generation: Property tax revenues in Uganda contribute just 0.1% to GDP, far below global averages. Taxing vacant land in Civic Centre and Kololo I parishes alone could generate up to UGX 1.8 billion annually. Expanding this tax citywide would significantly boost local government revenue, funding essential services like waste management, road repairs, and infrastructure development.
2. Discouraging Speculation: Taxing idle land would impose financial costs on speculative holding, encouraging owners to develop or sell their properties. This would free up prime urban land for housing, businesses, and public projects.
3. Encouraging Sustainable Growth: Urban sprawl, driven by inefficient land use, increases the cost of public utilities and depletes resources. A vacant land tax, paired with zoning reforms, could promote densification, making cities more efficient and sustainable.
4. Addressing Inequity: Idle land appreciates in value due to public investments in infrastructure, yet its owners contribute little to urban development. Taxing such land would recapture some of this value for the public, reducing inequalities in land ownership and use.

Learning from Global Examples

Other countries have successfully implemented vacant land taxes to promote efficient land use:

• Kenya: Nairobi taxes idle plots under the Urban Areas and Cities Act, prompting development, particularly for affordable housing.
• South Africa: Johannesburg’s higher tax rates for vacant land have curbed speculation and encouraged development.
• South Korea: Seoul imposes a progressive vacant land tax that discourages hoarding and funds public services.
• United States: Cities like Pittsburgh use split-rate taxation, taxing land at higher rates than buildings, which has reduced vacancies and increased urban density.
• Singapore: Steep fines and taxes on undeveloped land have spurred orderly urban development.

Uganda can draw lessons from these examples to create a system tailored to its unique challenges.

Overcoming Challenges

While the benefits are clear, implementing a vacant land tax in Uganda presents challenges:

1. Land Registration and Valuation: Outdated records make it difficult to identify and value land accurately. Investment in Geographic Information Systems (GIS) and digital registries is crucial.
2. Public Resistance: Landowners may resist the tax. Public education campaigns highlighting its benefits and providing exemptions for vulnerable groups will be essential.
3. Administrative Capacity: Local governments lack the tools and expertise to administer such a tax. Training and capacity-building programs are needed.
4. Legislative Reform: Amending the Local Government (Rating) Act to include vacant land taxation will require political will and stakeholder collaboration.

A Roadmap for Implementation

To maximize its impact, Uganda should adopt a phased approach:

• Legal Reforms: Amend the Local Government (Rating) Act to define vacant land, specify tax rates, and enforce penalties.
• Modernized Systems: Invest in digital tools to ensure accurate land records and valuations.
• Public Engagement: Build awareness about the benefits of the tax while addressing public concerns.
• Incentives for Development: Offer rebates for timely development and higher tax rates for long-term idle plots.
• Capacity Building: Equip local governments with the tools and expertise to implement and enforce the tax.

The Way Forward

Taxing vacant land is not just an economic reform; it’s a social and developmental imperative. It ensures that all landowners contribute to urban development, transforming idle plots into productive assets that benefit everyone.

By adopting global best practices, leveraging modern technology, and addressing legislative and administrative gaps, Uganda can reshape its urban centers into engines of growth and equity.

The time to act is now. Uganda must embrace actionable reforms to transform its cities into thriving, sustainable hubs of opportunity.