Finance Minister Syda Bbumba balanced the act on the rich and the poor in a pre-election budget yesterday, which postponed the pain of spending cuts and announced new tax waivers.
In her second budget as a Finance Minister, Ms Bbumba once more announced that in the coming financial year, “the policy is not to introduce major tax proposals but instead provide stability for the tax system as an incentive to investment.”
In Financial Year 20010/11 there will be no increases in duty and tax rates, as a measure to stimulate the economy.
Lucky boda bodas
To the delight of the boda-boda cyclists, Ms Bbumba announced a reduction on registration fees for motorcycles by Shs80,000 from Shs222,800 to Shs141,400 and instructed URA to decentralise registration “to make transport for the ordinary Ugandan more affordable.”
Consistent with government policy of promoting the use and development of the ICT sector, Ms Bbumba also announced that the VAT on software licence will be waived as is the case with computers and their software.
Announcing that the economy would grow by 0.6 six per cent (from 5.8 per cent in 2009/10 to 6.4 per cent next financial year), Ms Bbumba presented a cautious Shs7.7 trillion pre-election budget, up from Shs7.3 trillion in the current financial year.
In the new budget domestic sources were projected to finance about 75 per cent of the budget, while the balance of 25 per cent will be provided by the donors.
Faced with deficits and an election expected in February 2011, Ms Bbumba provided Shs102 billion to the Electoral Commission in the current financial year to ensure successful 2011 polls and provided Shs500 million to fund activities of political organisations.
Ms Bbumba said URA revenue collections were projected to underperform by about Shs 160 billion against the target of Shs 4.5 trillion projected for the period (the current financial year).
The minister warned of a negative impact on the base for next fiscal year over revenue shortfalls, Bbumba said in the next financial year URA is expected to collect Shs5 trillion billion.
But any failure to raise the required finances to fund the priorities in the new budget means that the final reckoning of the budget crisis might only begin to hit immediately after the 2011 general elections.
In what could draw a smile from some civil servants, starting next financial year, Ms Bbumba announced a 30 per cent pay increment to enhance the salaries of scientists, primary school teachers, low cadre health workers, and low cadre staff in Security forces.
“Government is taking action to improve the remuneration of Public Servants as a means of improving their motivation and better service delivery. However, due to resource constraints, Government will start with enhancement of salaries for key selected staff in the FY 2010/11 budget,” Ms Bbumba said.
For the rest of the civil servants, Ms Bbumba said she had provided financing to cater for inflation and provided an additional Shs3 billion to enhance salaries for Commissioners in Constitutional Commissions.
Ms Bbumba also announced that the government would pay all Local Council I and II chairpersons in recognition of their contribution at improving governance and accountability at local levels. The minister has provided Shs10.7 billion for this purpose.
Ms Bbumba said the new budget theme: “Strategic Priorities to Accelerate Growth, Employment and Socio-Economic Transformation for Prosperity”, was in line with the thrust of the National Development Plan, seeking to transform Uganda to a modern country.
Hope for North
Ms Bbumba offered the people in war-ravaged northern Uganda a glimpse of hope when she announced that the government had increased the funding for development from Shs100bn provided in 2009/10 to Shs124 billion in the next financial year.
The minister also provided Shs200 million for the families of the 69 victims of the Mukura Tragedy to be paid through the Ministry of Justice and Constitutional Affairs.
To deal with unemployment, Ms Bbumba undertook to promote science and technology application in the next financial year to enhance private enterprise technological capacity for greater job creation.