Donor aid cuts contribute to URA’s Shs175 billion shortfall

The government payroll cleanup that weeded over 5,000 ghost employees also contributed to the deficit.

Uganda Revenue Authority has registered a Shs175.48 billion tax shortfall against the Shs3.5 trillion projection it hoped to achieve in the first half of the 2012/13 financial year.

Despite the shortfall, the tax man registered improvement in economic growth with the economy growing at an annual rate of 1.8 per cent in the last six months compared to 0.6 per cent in the same period in 2011. The growth has been attributed to a 3.1 per cent growth in the agricultural sector compared to the industrial sector which declined by 1.2 per cent.

In December alone, the tax authority registered a Shs763.03 billion tax collection against the targeted Shs835.36 billion, registering a deficit of Shs72.33 billion.

Reasons for shortfall
Ms Sarah Banage, the commissioner corporate communications, attributed the taxman’s failure to achieve the target to the government payroll cleanup that weeded over 5,000 ghost employees, causing a decline in Pay As You Earn (PAYE) collections, the withdrawal of donor aid to Non-Governmental-Organisations (NGOs) and a decline in the importation of high tax yielding items.
The report indicates that aid cuts to NGOs were influenced by the improved stability and security in the country, forcing those which have achieved their targets to wind up their businesses and lay of staff; thus, affecting PAYE.

The East African School of taxation executive director, Mr Godfrey Akena, when contacted, said the deficit is big and could translate into a revenue shortage at the end of this financial year.

“URA should have covered this deficit in December when many companies file their returns. Therefore, it will be tough to recover in the next remaining months of the financial year,” he said.

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