By CPA Zuriat Nakayenga
Tax Manager, Uganda Breweries Limited
Government revenue is the strategy used to generate cash to be used by Government entities to fund its day-to-day operations. Normal tactics like tax collection, application fees, and levies are used to collect revenue.
On the 25 January 2024, the National Budget framework paper for 2024/2025 to 2028/2029 was tabled to Parliament by the Minister of State for Finance, Planning and Economic Development (MOFED). The budgetary priorities highlighted in this paper were Peace, Security, Roads & Electricity. From the key discussions, Government was advised to gradually scale down on external borrowing which stands UGX 80.8 trillion.
The main source of any Government’s revenue is taxation, however, looking at the Budget for 2023/2024 with theme of “Monetization of the Uganda’s Economy through Commercial Agriculture, Industrialization, Expanding and Broadening services, Digital Transformation for Market Access”, out of the UGX 52.7 trillion planned expenditure, Government envisioned to collect UGX 29.7 trillion from tax and non-tax revenue which is almost 55%. The Government hence looks at the alternative sources like borrowing and financial aid to fund the 45%.
Obviously, there is still a huge opportunity and untapped tax base for Government to increase domestic revenue collection through Taxation and non-tax revenue. MOFED should consider prioritizing building public trust. Government has a duty to demonstrate to its taxpayers that tax paid is put to good use. Tangible evidence is necessary in form of construction of good public and feeder roads that reach to the ‘muntu wawansi’, improve public health service and consider rolling out a robust health insurance for all ‘borrow notes from Obama care and Kenya’s Universal health coverage. A Ugandan should not be seen dying due to failure to access essential healthcare.
Government should add tax education to the curriculum right from primary school to tertiary institutions to increase the awareness on the importance of paying tax and to reduce tax evasion and tax avoidance and limit public protests taxes. The recent protests like Kikuubo traders taking to the streets to demonstrate against ‘EFRIS calling it a tax’ can be avoided. Obtaining Tax identification Numbers and filling of returns should be made compulsory all.
In Kenya today, small Government bonds can be accessed through ‘Mpesa’, a mobile money platform. The Government of Uganda has got to rethink strategy on how to fund the 45% Budget in F25/26 through optimizing tax collection and devising strategies to tax the informal sector. To diversify its revenue, Government can consider leveraging on royalties from natural resources like oil, gas and minerals. More effort should be put in strengthening the role of public private partnerships in delivering capital intensive public projects such as the express highways, and bridges accompanied by the creation of social impact bonds.
