President Yoweri Museveni’s comments at the presentation of the 2023/2024 Budget Speech this week continue to cause debate among experts, technocrats and the general public.
Notably, the president rapped Uganda Revenue Authority for what he called underperformance in revenue collections, as well as the condemning the high borrowing rates of the country.
The president said a tax to GDP ratio of about 13 percent is unacceptable and challenged Commissioner General John Musinguzi to increase the efforts.
Speaking at the Certified Public Accountants of Uganda (ICPAU) post-budget conference, CPA Martin Makumbi pointed at the policies and the laws under which URA operates to achieve the target it is given.
While it is likely to slightly fall short of this year’s target of about 25.5 trillion Shillings, URA is expected to collect about 4.5 trillion more next financial year to hit the new 29.7 trillion Shillings target.
Makumbi, a Tax Consultant at Deloitte wonders how this will be possible with the decision by government not to introduce new taxes. He fears that URA will continue ‘deepening’ the tax base where the current few taxpayers will be made to pay even more, instead of widening the base to include new taxpayers in the net.
However, Ramathan Ggoobi, Permanent Secretary and Secretary to the Treasury says his ministry is convinced URA will raise the money.
“We have enhanced our efforts in domestic revenue mobilization to increase revenue collection to finance our development agenda. In the coming year, we will adopt a more proactive and aggressive approach to revenue collection,” he said.
The PS says one of the major problems with Uganda is that most of them are farmers, yet these do not want to be taxed. A big number of policymakers, legislators and technocrats are also farmers who are opposed to taxation of the sector.
He however says efforts are underway to ensure the agriculture sector and the informal sector adequately contribute to tax revenues.
“If we want more tax revenue, we must have a candid conversation on how we can tax commercial agriculture. We are investing 2.7 trillion Shillings in that area but it is not paying tax,” he lamented.
He also said that soon the government will resume the introduction of new taxes as it seeks to expand the tax base.
On the public expenditure, the experts welcomed the move by the government to cut travel by public officials and the number of workshops by government MDAs, as well as the the moratorium on the purchase of new government vehicles.
CPA Makumbi hoped that these measures would be strictly implemented and the saved resources directed to more critical areas.
Speaking at the same event, Economist and university lecturer, Fred Muhumuza agreed with the president but faulted the responsible authorities on the figures on Uganda’s indebtedness.
President Museveni said it was unacceptable to 17 trillion shillings (almost 60 percent of the expected domestic revenues) to be used to service debt next financial year.
This means consumptive expenditure, like salaries, wages and allowances and other public administration expenses among others, will be left with about 10 trillion shillings.
Dr Muhumuza, however, said even the 17 trillion is an underestimate because domestic arrears like pension arrears, compensations, court fines and obligations to government suppliers, are not included in the figure.
He welcomed the the decision by government to include what it owes to Bank of Uganda, though it was at the insistence of ICPAU, IMF, World Bank and NGOs.
The experts say this goes takes the total indebtedness to more than 24 billion dollars (about 90 trillion shillings).
Dr Muhumuza urged professional bodies to continue pushing 5he Ministry of Finance and the Uganda Bureau of Statistics to include each and every government obligations when compiling national debt figures.
On the high rates of borrowing, president Museveni said he decided to take over the power of final approval of loans requests because some of the loans being acquire were found to be unnecessary.
Asked for his comment, economist Augustus Nuwagaba said the issue was not borrowing however much, but the intention.
“Borrowing is not bad but there are things that Government needs to consider; why is it borrowing, where is it borrowing from, and its capacity to pay back,” Prof Nuwagaba said, partly echoing the president’s concerns.
Speaking on the revenue mobilisation target, Sarah Chelengat, Commissioner Domestic Tax Department, says they are ready for the task.
“As tax payers become more complex, we are also not sleeping as URA. We are doing a lot of benchmarking, training and using consultants to support us. Domestic tax revenue will be 29.7 trillion and it’ll be the mandate of URA.”
Chelengat says there is a lot to do in the form of sensitisation because “most of our taxpayers just know about the trading license. Many are not tech savvy and yet technology has been a game changer when it comes to tax compliance.” Differing with the president on URA’s performance, Ggoobi said the URA had done commendably well, though there was room for improvement.
“I personally commend URA for collecting revenue in these very hard times. They have really done a good job for the past years, for at least the time that I have been in the treasury. But we are saying it is not enough, we need to work harder.”
Meanwhile, there are also complaints from different sections of the population regarding the current budget format, which is based on programs and no longer on sectors.
It is no longer easy, for example to tell how much money went to which sector or ministry, since projects cut across sectors.
Dr Muhumuza says the budget is hard to analyse even for policy advisors and leaves many people uncertain of what and how sectors will be funded.
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