Better investment climate key to improved revenues, experts say

Mr Muhammed Ssempijja, a tax expert (R), and URA Commissioner for customs Richard Kamajugo at the authority’s headquarters last week. Mr Ssempijja was analysing the half year tax performance of the tax body. PHOTO BY DOMINIC BUKENYA


Following the recent revenue shortfall of nearly Shs250 billion, Uganda Revenue Authority will have to quickly capture more people into the taxpaying bracket even as it seeks to close loopholes that could see the deficit further widen, tax and economic analysts have advised.

In the medium term though, the experts say there is a great need to improve the overall investment climate if the country is to improve its revenue earnings.

The Tax Partner and Country Leader of Ernst & Young, Mr Muhammed Ssempijja, predicts hard times for the tax collectors although they are also of the view that it is not too late for the tax body to redeem itself from the looming revenue shortfalls.

“We need to be focused in improving Uganda’s investment climate to ensure it is more attractive to foreign direct investment in areas with significant multiplier effects on the economy like employment creation,” Mr Ssempijja said in an interview.

According to him, corruption needs to be aggressively tackled so as the little public resources are put to proper use in sectors such as transport, health and education. To stimulate business which will result in more employment and consequently boosting revenue collections, just like the other analysts, Mr Ssempijja said high interest rates need to reduce to a least below 10 per cent.

There is also need for a proper food security strategy, which the tax analyst, said should ensure that food crops are produced without relying on rain fall patterns. Post-harvest handling and storage must be efficient—in other words food supply should happen throughout the year.

Makerere University Associate Professor Augustus Nuwagaba, in an interview, said there is need for more tax education and more accountability from the government in how they spend the tax payers’ money. And anything short of that will derail compliance, he said.

Efforts meant to boost revenue collection

URA commissioner general Allen Kagina said last week, enforcement of tax compliance will be intensified, sensitisation on integrity and gazzeting/capturing of new tax payers especially from the informal sectors including but not limited to embracing technology will be employed in increasing revenue collections.

Other Enhancement Initiatives include; reduction in clearance times, piloted Electronic Cargo Tracking System (ECTS), rollout of ASYCUDA WORLD to eight major stations which account for 98 per cent of revenue, tax hubs for the Motor vehicle validation exercise, engagement with Accounting Officers on Non Tax Revenues (NTRs) and capacity building of URA staff, among others.

The economic prospects for Uganda look good in the short and medium term but there is need for government to deal with the challenges which majorly include supply side bottlenecks, tax evasion and corruption in government and public institutions.