On June8, 2017 (next Thursday), Matia Kasaija, the Minister of Finance, Planning and Economic Development will take to the podium at the Kampala, Serena Conference Centre to present to the nation the 2017/2018 National Budget.
This important event will be preceded by state of the nation address that will be delivered by President Yoweri Museveni on Tuesday.
This follows the passing and approval of the Shs29trn budget for 2017/18 by Parliament on Wednesday in line with Public Finance and Management Act, 2015. This is higher compared to the Shs25.6trn budget in 2016/17.
This means that come July1, 2017, the 2017/18 budget heavy tax burden where Uganda Revenue Authority (URA) is expected to raise Shs14.5trn, up from Shs12.6trn in 2016/17 will take effect.
Of the Shs29trn budget, Shs7.58trn will be spent on recurrent budget expenditure, Shs11.45trn on total development budget expenditure and Shs9.97trn on statutory spending. The NRM Government seems to live true to its promise of attempting to
Following heavy domestic and external borrowing in recent years, government has set aside Shs2.675trn (12.16% of the total budget) for payments of interest rates that are due.
According to a report by Parliament’s Budget Committee on Budget Estimates for 2017/18, the upcoming budget is aimed at increasing agricultural production and productivity for food security and strategic exports. However, a critical look at the budget suggests that nothing much has changed from the previous budgets, with key sectors continuing to get smaller allocations.
Allocations
Uganda continues her ambitious infrastructural development as the country moves towards achieving a middle income status by 2020.
Accordingly, Ministry of Works and Transport has been allocated Shs4.6trn, representing 21% of the total budget.
The Ministry itself will take Shs461.1bn, while Allen Kagina’s Uganda National Roads Authority (UNRA) will take Shs3.62trn despite having absorption issues in the previous budget.
Education Ministry has been allocated Shs2.4trn, down from Shs2.44trn in 2016/17, while Energy Ministry that is headed by Eng. Irene Muloni as line minister has been allocated Shs2.379trn.
Other sectors that have been allocated huge chunks of money include Ministry of Health (Shs1.821trn) and Ministry of Defence (Shs1.39trn), down from Shs1.57trn in 2016/17.
However, while the budget’s focus is on increasing productivity, the mainstay of Uganda’s economy- the agricultural sector has been allocated a paltry Shs863bn. This represents 3.9% of the national budget.
While the world is fast embracing Information Communication Technology (ICT), Uganda’s newly created Ministry of Science, Technology and Innovation has been allocated a mere Shs66.8bn, representing 0.30% of the total budget, while ICT will walk away with Shs106bn.
Ministry of Water, Tourism and Antiquities has been allocated Shs98bn, representing 0.45% of the total budget. It is worth noting while tourism continues to receive minimum attention, it is Uganda’s leading foreign exchange earner.
State House has been allocated Shs245.54bn and over Shs500m will be spent on a daily basis.
Upcoming Taxes
Parliament recently approved VAT reinstatement on wheat grain, a move that is likely to increase prices of wheat products such as chapattis, rolex, bread and cakes among others. Government hopes to raise about Shs30bn from wheat taxes.
Tourists will also continue to pay VAT, while 15% withholding tax on winning from gambling was approved Parliament. This is expected to raise revenue worth Shs8bn.
Alcohol consumers will have a 60% tax increment on malt beer, while consumers of beer with 75% local material content will suffer a tax of Shs600.
Relatedly, spirits from locally made materials will attract Shs5000 tax.
Beer made from barley grown and malted in Uganda will see a 30% increment or Shs950 tax increment.
On a good note, VAT exemptions on irrigation equipment, animal feeds and crop extension services have been approved by Parliament.
Additionally, Ugandans have also been exempted VAT on menstrual pads solar batteries.
In an attempt to decongest Kampala, investors putting up investments 50km outside Kampala have also been exempted from paying income tax.
