By Brian Sserunjogi

Based on the recently published National Budget Framework paper, Uganda’s national budget for the FY 2018/19 is anticipated to be UGX 21.9 trillion. In order to finance the above budget, the Uganda Revenue Authority (URA) faces an uphill task to increase total domestic revenue by 9 percent from UGX 14.3 trillion in FY2017/18 to UGX 15.6 trillion in FY 2018/19.

Despite, persistent growth in net URA collections over the last decade, in the recent past, the tax body has consistently fallen short of its ambitious revenue targets. Specifically, URA registered a shortfall of UGX 458 billion, UGX 404 billion, UGX139 billion and UGX 503 billion for the 2016/17, 2015/16, 2014/15 and 2013/14 respectively. Although these deficits appear small in relation to the respective annual set targets, the impacts in terms of what public services could have been financed is huge.

For example, the UGX 458 billion revenue deficit registered in 2016/17 was slightly more than half, the budget allocated to the agriculture sector, a sector that supports livelihood of majority of the population.

In addition, a forecast of macroeconomic environment in 2018/19 does not seem to paint any better picture to support URA’s efforts to hit the anticipated revenue targets. For example, In 2018/19, Uganda’s economy is projected to grow at 5.5 percent, however, past trends reveal that in the last five years, the economy has only managed to achieve an annual average growth of 4.5 percent.

Additionally, the continued civil unrest in South Sudan and uncertain weather conditions are likely to subdue exports while the commercial banks are cagey about expanding private domestic credit. Meanwhile, continued delays in the completion of public infrastructure investments is likely to prevent the short term productivity gains that could be realized from enhanced infrastructure.

Furthermore, the accumulation of domestic government arrears will likely worsen private investment and raise non-performing loans. In addition, there are unresolved civil servants demands for salary enhancements expected to cost UGX 1.8 trillion in 2018/19 and UGX 3.6 trillion over the next four years. All the above suggest that the tax body has to come up with innovative measures to boost both domestic tax and non-tax revenue to finance the national budget.

With only a few anticipated changes to current tax regime in 2018, strict compliance and enforcement measures remain the most feasible avenue available for URA to boost domestic revenue collections. As such, URA is likely to devise “aggressive” revenue collection measures in FY 2018/19 to close revenue leakages. Building on the success of the implementation of the Tax Registration Expansion Project (TREP) in expanding the tax register in the last 3 years, I envision that in FY 2018/19, URA will target increasing the number of individuals taxpayers on its tax register by vigorously utilizing the existing information technology infrastructure.

In this regard, URA can link the national identity information with mobile money and other online payment platforms to provide tax identification numbers to each and every Ugandan of working age, employed or not for purposes of taxation. Additionally, URA can collaborate with a network of actors including other government agencies, banks, employers, utility companies, professional bodies to exchange useful information on potential taxpayers.

URA can also intensify efforts to bring more high net worth individuals—mainly those in the political and business class into the tax net. Forming a separate unit dedicated to these types of individuals—that is distinct from the large tax office, can prove worthwhile. Finally, given the surge in the “real estate” economy during the past 10 years, there is need to target this subsector beyond the collection of stamp duty.

The article was first truncated and published by New Vision on January 15, 2018.

The author is a Research Fellow at Economic Policy Research Centre


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