Kampala- Government has increased the Uganda Revenue Authority (URA) collection targets by a trillion shillings despite the tax collector grappling with revenue shortfalls of nearly Shs500 billion.
The estimates for URA for the new Financial Year 2014/2015, is Shs9.5 trillion from the previous revenue target of Shs8.5 trillion.
The cumulative shortfall, amounting to Shs475 billion is almost half the budget allocated to the Ministry of Health, Agriculture, Education and Defence.
“Net URA revenues for Financial Year 2013/14 were projected at Shs8.5 trillion, but cumulative collections are estimated at Shs8.1trillion, recording a provisional shortfall of Shs475 billion for this financial year,” the Finance Minister, Ms Maria Kiwanuka, said in her Budget speech yesterday.
Ms Kiwanuka said the underperformance of the revenue collection was mainly due to lower than projected growth in the economy which affected particularly taxes that are not only easy to collect but generate most domestic revenue, Value Added Tax and Corporate Income Tax.
However, URA senior management team said they would keep fighting to reduce the shortfalls or hit the collection targets of Shs8.5 trillion until this month ends.
“Despite reading the budget (with revenue shortfalls), for us, our financial year ends in June. Until then, we believe anything can happen,” the URA commissioner for domestic taxes, Mr Henry Saka, said yesterday.
“We have proven before that in the last month of the financial year, we can change the tides,” he added.
“As to whether it is an ambitious target or not, that is not our mandate. Our task is to collect that amount. We will try by all means to do our job in the best way we can, collect the money,” Mr Saka replied when the Daily Monitor asked him whether the target is not an ambitious one given the cumulative shortfall.
According to the Budget read, total revenue collected is projected to amount to Shs15 trillion in the next financial year.
Of that, domestic sources will contribute Shs12.3 trillion representing 82 per cent of the total budget collection for the year.
Meanwhile, URA will collect Non-Tax Revenues of Shs206 billion. The budget will, among others, also be financed by issuing government securities.
To collect that amount, tax expert Francis Kamulegeya argued that a range of new tax measures which include new taxes and more strict measures of tax enforcement, will be one of the way out government will consider.
The Makerere University don, Prof Augustus Nuwagaba, said skilling the youth and making them more productive is one of the ways government should prioritise- something the budget addressed.
Despite the revenue shortfall thus far, the total collection performance according to the government stand at 94 per cent of the projected revenue.
To achieve a 100 per cent performance in the new financial year, Ms Kiwanuka said: “Government will take corrective measures to improve revenue performance. This will include strengthening tax revenue administration, the vigorous collection of uncollected taxes, and new tax revenue enhancement measures.”