Govt registers shortfall of Shs394.60b in domestic revenues
What you need to know:
- Last month, taxes on international trade transactions registered the biggest shortfall of Shs226.67 billion having amounted to Shs761.50 billion against a target of Shs988.16 billion
The Ministry of Finance, Planning and Economic Development has said that the government registered a revenue shortfall of Shs394.60 billion in December 2023, as domestic revenue collections continue to suffer from challenges in tax administration.
The Ministry of Finance said in the performance of the economy monthly report December 2023 released on January 17 that domestic revenue collections in December 2023 amounted to Shs3.059 trillion, which was against a target of Shs3.453 trillion implying a shortfall of 11.4 per cent of the target) as both tax revenue and non-tax revenue were short of their respective targets for the month.
“Tax revenue collections amounted to Shs2.902 trillion against a target of Shs3.268 trillion translating into a shortfall of Shs365.79 billion. All the major tax categories registered shortfalls during the month," the Ministry said in the report.
During the month, taxes on international trade transactions registered the biggest shortfall of Shs226.67 billion having amounted to Shs761.50 billion against a target of Shs988.16 billion.
“This underperformance is partly attributed to the realized imports (on which VAT and excise duty are charged) being less than those projected for the month. This resulted in import duty, excise duty and VAT on imports as well as infrastructure levy all being lower than projected for December 2023,” the Ministry of Finance said.
During the period, indirect domestic taxes amounted to Shs547.21 billion against a target of Shs 651.79 billion, implying a shortfall of Shs104.58 billion. Both Value Added Tax (VAT) and excise duty were short of their respective targets for the month partly due to tax administration challenges.
Similarly, direct domestic tax collections were short of their target (Shs1.66 trillion) by Shs 23.11 billion. The Ministry of Finance explains that most of this shortfall was registered under withholding tax (short by Shs 81.84 billion) which offset surpluses registered for PAYE (Shs 55.97 billion), corporation tax (Shs 6.95 billion) and rental income tax (Shs 10.61 billion) among others.
Public Expenditure
The Ministry of Finance said it was projected that government expenditure would total to Shs 3.155 trillion in December 2023. However, actual expenditure outturns amounted to Shs 2.690 trillion implying a performance of 85.3 per cent against the plan for the month. Both recurrent and capital expenditure categories performed at less than 100 per cent.
Computed figures show that total spending on recurrent items during the month was Shs1.735 trillion against a plan of Shs1.813 trillion, with wage payments and non-wage payments being lower than initially programmed by Shs24.30 billion and Shs 53.61 billion respectively.
Development expenditure was less than programmed for the month by Shs 384.27 billion (28.8 per cent). This was wholly due to the externally financed component of this expenditure category which performed at only 39.3 percent.
On the other hand, the domestically financed component of development expenditure performed at 114.1 per cent of what was initially programmed. The Ministry of Finance said this was partly due to a substantial increment in funds released in Q2 to compensate for the low release in quarter one for this category.
