Tuesday March 26 2013

International trade revenues hurting URA annual targets

Ms Banage, URA assistant commissioner,

Ms Banage, URA assistant commissioner, corporate and public affairs. FILE PHOTO. 

By Ismail Musa Ladu

Kenya Revenue Authority’s arbitrary introduction of cash bonds, the Mombasa Port congestion, and the dollar volatility seem to have conspired to undermine Uganda’s attempts to collect the much-needed international trade revenues.

Compounded with the recent truck drivers’ strike in Kenya and the ongoing jetty repairs in Mombasa, and not to mention the scare that hit the traders ahead of the Kenyan election, it appears it will take a while before Uganda Revenue Authority can begin to achieve its international trade revenue collection targets.

In the first half of the financial year, URA’s balance sheet indicated a cumulative deficit of Shs140 billion in international trade revenue.
With now four months left to the close the financial year, the tax body is still struggling with international revenue deficits.
Unlike internal disruption like the cargo clearance system failure that URA says it has now repaired, most of the factors affecting tax collection are external disturbances.

“The performance of international trade revenue depends on several factors. And any one of those factors can have a negative impact on revenue collection.” “The bad news is that most of these factors are beyond our control,” Mr Stephen Magera, URA’s assistant commissioner in charge of trade told Prosper last week.

According to Ms Sarah Banage Birungi, the URA assistant commissioner for corporate and public affairs, International Trade Taxes’ performance continues to improve even though it is yet to achieve its targets.

She said the under performance of the international trade division was due to the low fuel volumes, particularly in February where total fuel imports registered a decline of about 2 per cent.
“This was mainly due to lower than projected growth in fuel import volumes caused by repairs of the off-loading Jetty in Mombasa,” she said.

Petrol registered a decline of 6 per cent from 41 million litres in February 2012 to 39 million litres in February 2013, while Diesel registered a decline of 5 per cent from 63 million litres in February 2012 to 59 million litres in February 2013.
In an interview Mr Moses Ogwal, the Private Sector Foundation (PSFU), director of policy and advocacy, said external trade disruptions largely explain the consistent revenue shortfalls recorded in international trades.

“We are all concerned by the revenue shortfall. But if the EAC can commit to eliminate non-tariff barriers, then business will flourish and revenues will be smoothly collected,” he said.
And Mr Akena the executive director, East African School of Taxation, said the current Shs115 billion revenue shortfall, with about four months to close the financial year, may not be recovered given the time constraint.

In an earlier interview Mr Richard Kamajugo, the URA commissioner for customs, said: “With the economic crisis in Europe (Euro zone crisis) the EAC and Uganda in particular was bound to feel the after-effects considering that it the region’s major trading partner.”