The Ministry of Finance, Planning, and Economic Development in Uganda is proposing a tax revenue target of almost 29.96 trillion Shillings for the Uganda Revenue Authority (URA) in the next fiscal year, a slight increase from the current year’s 29.67 trillion. Despite consistent challenges and a decade of falling short of targets, URA Commissioner General, John Musinguzi, emphasizes the importance of aligning the annual target with the country’s economic strengths and challenges.
Mark Mulumba, Program Officer at SEATINI Uganda and a member of the Tax Justice Alliance Uganda, highlights two significant obstacles hindering URA’s performance. First, there is a lack of resources, limiting URA to monitor only one-fifth of the country’s border points, leading to significant tax leakage. Second, Mulumba points out the need for increased capacity to address the challenges posed by the expanding digital economy, requiring more qualified personnel and collaboration with other government agencies to combat tax fraud.
Despite consistent target shortfalls, URA has maintained steady revenue growth over the years, reaching approximately 26 trillion Shillings from 700 billion Shillings three decades ago. Last fiscal year, URA exceeded its target by 58 billion Shillings. However, Mulumba acknowledges that challenges persist, such as the substantial informal sector with a limited number of taxpayers compared to the eligible population.
Mulumba advocates for an increase in the number of tax personnel to reduce the high tax officer-to-taxpayer ratio, a factor contributing to their stretched ability to perform effectively. He also discusses the impact of political factors, including presidential pronouncements and legislators’ attitudes towards government programs, as well as challenges faced by MPs in interpreting laws, especially those influenced by international agreements like double taxation treaties.
On the flip side, the Tax Justice Alliance Uganda faces criticism for not instilling confidence, trust, and interest among Ugandans to pay taxes. Winfred Anyaiti, representing the Youth for Tax Justice Network, calls for a shift in advocacy focus towards not only increasing revenue mobilization but also monitoring how government revenues are utilized. Anyaiti emphasizes the importance of regional and continental harmonization of tax incentive policies within the East African Community (EAC) to prevent companies from exploiting gaps by moving between countries for fresh benefits after tax incentives expire. This, she believes, would enhance transparency and discourage fraudulent practices.
