Members of Parliament have expressed concern over the increasing tax arrears which are currently valued at Shs2.97 trillion, with calls to Uganda Revenue Authority to expedite collection of the uncollected revenue.
While presenting the report on budget estimates for 2021/22 national budget, Amos Lugoloobi, former Chairperson Parliament’s Budget Committee revealed that the stock of tax arrears has been steadily grown from Shs1.27Trn in FY 2015/2016 to Shs2.989Trn as at December 2020.
“The Committee observes that although there is a noticeable growth in the tax register in the last four years, the growth in tax arrears constrains the revenue mobilization efforts by Government and must be addressed,” Lugoloobi remarked.
The same report highlights that the fiscal operations have been constrained by revenue short falls. It has also led to slow execution of infrastructural projects.
According to the Budget Committee, Revenue collections amounted to Shs9.746Trn in the first half of FY 2020/2021 against a target of Shs10.869Trn resulting into a shortfall of Shs1.122Trn.
Of the total revenue collected during the half year, Shs9.054Trn was tax revenue while Shs691.9Bn was Non tax revenue. Both tax revenue and non-tax revenue collections were lower than their respective targets by Shs964.6Bn and Shs157.7Bn.
Direct domestic tax collections amounted to Shs3.314Trn, performing below the target for the period by 1O.5 percent which is equivalent to a shortfall of Shs388.8Bn. Shortfalls were registered for collections of Pay as You Earn – PAYE, corporate tax and rental income tax (short of target by Shs168.5Bn, Shs108.5 billion and Shs87 billion respectively.]
Government blamed shortfall on PAYE collections from formal employment on the permanent and temporary layoffs associated with COVID-19 for example in the education sector.
Additionally, Indirect domestic taxes amounted to Shs2.159Trn recording a performance below the target of Shs2.432Trn resulting in a shortfall of Shs273.5billion.
This shortfall was both in excise duty-Shs127.7Bn and Value Added Tax (VAT)- Shs145.7Bn.
VAT collections for the period were Shs1.443Trn against a target of Shs1.589Trn, implying a performance of 90.8 percent while Excise duty collections during the half year were Shs715.78 billion against a target of Shs843.51bi1lion.
On the other hand, Taxes on international trade amounted to Shs3.686Trn, which was lower than the set target of Shs4.026Trn for the half year.
Under Non-Tax Revenue (NTR) Government collected Shs691.9Bn in form of non-tax revenue in the first half of the Financial Year. This was against a target of Shs849.6Bn. Most of the items under this category were below their respective targets as some MDAs that collect this revenue had not yet returned to the pre-pandemic operational capacities
Although Government had anticipated to receive grants to a tune of Shs927.9Bn, it only ended up receiving Shs825.7 billion in form of development assistance from development partners, thus failing to hit their target by Shs74.8Bn.
