Under assessment hurting mining tax revenue - report
Potential: The mining sub-sector has the potential to generate at Shs70.2b annually. FILE PHOTO
What you need to know:
- Finalise plans. According to Ms Cissy Kagaba, government must finalise plans that improve performance of public financial management to help improve spending and investing of revenues from natural resources.
- Government, she says, must also expedite the approval of the Petroleum Investment Policy and the operational agreement between BoU and Government to verify returns from the mining sub-sector instead of depending on declared returns.
Under assessment of payment of royalties in the mining sub-sector has led to loss of income, according to findings in the Auditor General Report.
According to the 2018/19 Auditor General Report, the Ministry of Energy and Mineral Development collected Shs10.5b in mining royalties out of a possible Shs70.2b.
A review from Uganda Revenue Authority indicates that the mining sub-sector can generate as much as Shs70.2b at an applicable rate of 5 per cent especially from gold, tantalum and tungsten.
Reacting to findings of the Auditor General’s report, civil society organisations demanded that government takes up appropriate action to close the loopholes.
“The Ministry’s reliance on declarations from the mining companies in form of monthly production returns, which are not independently verified is part of the problem,” civil society organisations said in a joint statement signed by Mr Julius Mukunda, CSBAG executive director and Ms Cissy Kagaba, the Anti- Corruption Coalition Uganda executive director.
Most mines in Uganda, the statement noted, lack regular inspection through which production figures can be confirmed thus creating the risk of under declaration of production.
“We therefore recommend that government addresses all the weaknesses in the assessment and collection of royalties so that enough revenues are generated from our mineral resources,” the statement said.
Civil society also raised concerns on the lack of a guiding investment law for the Petroleum Fund, which exposes the fund to abuse.
The Petroleum Fund was established by Section 56 of the Public Finance and Management Act and withdrawals are made through appropriation to either the Uganda Consolidated Fund or Petroleum Revenue Investment Reserve.
However, there is no cap on what should be appropriated to either of the two.
The Auditor General’s report discloses that there is lack of an approved petroleum revenue investment policy, which delays appropriation of funds for investment.
“In the natural resources sub-sector, a fiscal rule on government spending is very necessary. It helps to commit government to stable macroeconomic policy, which is necessary for growing and diversifying an economy dependent on large, finite and volatile natural resource revenues,” Mr Mukunda said.
