Fallout on taxes says a lot about our budgeting

It is just two weeks since the new financial year started and President Museveni has already spoken twice about the new tax on mobile money.
Mr Museveni first clarified that depositing on mobile money accounts would attract no tax, and issued a declaration halving the levy on sending and withdrawing money on mobile money from 1 per cent to 0.5 per cent of the money involved. Prime Minister Ruhakana Rugunda then briefed Parliament that the President’s directive to halve the tax that was imposed on mobile money transactions would be implemented.

But even after that, the President still found it important to further clarify that those who had been charged 1 per cent instead of 0.5 per cent on their transactions would have their extra monies refunded.
The President and the Prime Minister have also made it clear that debate on the subject is still open. The most effective way for a people to govern itself well, of course, is through debate.
It is, therefore, to be commended that our leaders are keen to emphasise the need to debate the idea. This follows widespread opposition to the taxes on mobile money and social media, which many have described in different ways.

But that said, the controversy around the taxes and the invitation to debate by the President and Prime Minister offer us a chance to reflect on the effectiveness of our budget process. The process takes about half a year, during which the proposals may be debated in the different spaces available. The problem is that hardly any debate takes place on many of the key things that eventually get to be included in the budget, including taxes (sources of revenue) and expenditure priorities.

Much of the conversation outside government is driven by civil society, which is nearly wholly donor-funded, meaning that it is perhaps hard for civil society actors to imagine alternative approaches to growing our economy.
Because both the government and civil society actors are donor-influenced and funded, and due to the fact that there is hardly any alternative thinking to cross-fertilise the ideas sponsored by the donors, very little changes over time.

The budget-making process therefore becomes ritualistic, single-mindedly focused on improving what is said to be a low tax-to-GDP ratio in an economy whose structural set-up remains the same – dominated by subsistence agriculture with a small and slowly growing or stagnant formal sector.
Because the President and his Prime Minister are now encouraging debate, may economists and other professionals who imagine alternative ways to speed up economic growth please stand up!