We need tax to deliver services, says Kasaija
Services delivery. Mr Charles Ocici (R), welcomes Mr Kasaija, who urged entrepreneurs to pay taxes in order to support delivery of services during the Global Entrepreneurship Forum in Kampala. PHOTO BY JUSTUS LYATUU
Finance Minister Matia Kasaija has said government can only deliver services if people pay taxes.
Speaking at the opening of the Global Entrepreneurship Forum in Kampala, Mr Kasaija, said entrepreneurs must honour their tax obligations to enable government develop necessary infrastructure and amenities that support business development.
“You must pay taxes because we need tax to provide services. I encourage you to report all those who are dodging because they will unfairly outcompete you,” Mr Kasaija said.
At a rate of 14.2 per cent to gross domestic product, tax revenue performance is still too low to support the country’s development needs.
This is mainly because some people and businesses that are eligible dodge on their obligations.
According to the Uganda Entrepreneurial Ecosystem Initiative survey phase one, most businesses in Uganda opt for horizontal growth because they intentionally want to remain small and informal so as to avoid paying taxes.
The survey also found that instead of growing vertically, most Ugandan businesses opt to expand horizontally by opening up other small businesses so as to remain below the taxable radar and avoid paying taxes.
The survey was conducted by Aspen Network of Development Entrepreneurs, Centre for Development Alternatives, Argidius, Dutch Good Growth Fund and Enterprise Uganda. Expanding horizontally is responsible for Uganda’s large informal sector and the low tax-to-GDP ratio, estimated at 14.2 per cent since informal businesses evade taxes.
To ease access to capital for small businesses, Mr Kasaija said, government would allocate Shs100b in the 2020/21 financial year to enable smaller scale entrepreneurs access soft loans.
The money, he said, would be loaned out through associations or cooperatives but cautioned against misusing the loans, saying money should be used for the purpose for which it is borrowed.
Mr Charles Ocici, the Enterprise Uganda executive director, urged entrepreneurs to always work around customer retention to ensure business growth and sustainability.
He also warned against uncontrolled expansion, saying it could result into enterprise failure.
