Is government changing revenue collection tactics?

The cargo scanner at Busia border which will help importers and exporters clear their goods faster. The scanner can clear up to 200 trucks in an hour. PHOTO BY DAVID AWORI

What you need to know:

The tax body, especially the customs department, is intensifying efforts to close loopholes leading to revenue losses. Uganda Revenue Authority’s new scanners are expected to help customs officials monitor and analyse contents of cargo entering and leaving the country, Ismail Musa Ladu writes.

Government is now tightening the noose on tax cheats who have illegally been importing and exporting restricted goods at Busia and Malaba border points.

Such loopholes at the borders have left a section of tax payers to single handedly shoulder the tax burden as others either avoid or evade this obligatory responsibility.

But with Uganda Revenue Authority (URA)’s installation of top range scanners at the customs points, chances of smugglers concealing goods will be no more. These scanners are expected to help customs officials monitor and analyse contents of cargo entering and leaving the country.

Such administrative inefficiencies, if closed, will hand the customs department some Shs700 billion more in international taxes within the revenue collection calendar.

This, according to URA commissioner customs, Dicksons Kateshumbwa, will relieve government of the pressure to introduce new taxes which would be shouldered by consumers, majority of whom are already part of the small formal sector.
“We are looking at raising extra Shs700 billion more. This can be realised if we improve our administrative efficiencies,” Mr Kateshumbwa said shortly after the commissioning of the scanner meant to detect hidden goods at the Busia one stop border point (OSBP) recently.

He continued, “At this point in time, it is hard to expect more revenue from policy initiatives. We already have common external tariffs that binds us. Taxes on fuel are already there. So, we need to look inward to collect more. Technology like these scanners can help us a lot in raising more revenue than policy initiatives.

“As long as these scanners can detect concealment, then we shall be able to meet our target,” Mr Kateshumbwa said.

This financial year (2018/19), URA’s revenue collection target is about Shs16.7 trillion. The new target is Shs1.8 trillion more than what was collected in the previous financial year (2017/2018). To hit or even surpass the target, URA, according to Mr Kateshumbwa, is relying on improved tax administration to beat the targets, with the installed scanners expected to play a pivotal role especially in collecting international taxes.

The customs department contributes about 40 to 45 per cent of the total revenue collection targets annually. Mr Kateshumbwa is optimistic that with recent addition of the top of the range scanners, each costing about Shs7.5 billion, customs officials should be able to make light work of concealed goods, believed to be making up between 20-25 per cent of cargo passing through the borders.

As a result, the senior director in charge of trade environment at TradeMark East Africa, Richard Kamajugo, believes with the leakages being tightened, thanks to the OSBP infrastructure that was funded by DFID through his organisation, revenue collections should steadily increase, and so will the quality of services offered in terms of quicker clearance of cargo.
The non-intrusive cargo scanners at the Busia and Malaba borders installed by URA, if properly used, should stamp out concealment of goods which is one of the commonest method of tax evasion.

The new scanners will be linked to existing systems such as the Asycuda World whose work is to clear imports and exports across the region before they reach their final destination.
Mr Kateshumbwa also said the scanners are not only spot on, implying that they can detect even the smallest of concealed item but can clear up to 200 trucks within an hour.

Revenue
The finance minister, Matia Kasaija, in an interview couldn’t quantify the value of what the technology could bring in terms of revenue but he was clear on what the scanners will do.
“These scanners will generate so much revenue, I cannot even quantify the amount. All the goods that would have otherwise slipped through the customs points without paying (international trade) taxes will now have to be detected,” Mr Kasaija said.

Users’ views
For Mr Henry Nzivosila, a truck driver, the problem is no longer about the quick clearance of trucks because the one stop border post has taken over it.
With the introduction of the scanner, life has gotten even easier. Before that, he said: “life was hell at the border. Clearance was one of the most dreaded exercises. We would spent hours, sometime days or even weeks struggling to clear a single truck.”

Winners, losers
Winners. The Private sector especially cross-border traders are the winners in this.
It emerged that the benefits that the private sector will accrue from this initiative will be much more than just what the government will get in return as revenue.
The private sector will clear their cargos faster and in so doing, save $300 (about Shs1.1 million) per day on cargo trucks that were not cleared.
“This is all we are asking for—faster clearance,” Mr Moses Ogwal, the director in charge of policy and advocacy at Private Sector Foundation Uganda, said when asked about the implication of the installed scanners. As a result, he continued: “competitiveness of the private sector will be enhanced. Why should it be a nightmare to just clear goods?”

Losers. Traders who conceal, under declare and mis-declare goods will not escape from paying their fair share of taxes.