A report by the Uganda Debt Network (UDN) shows that local revenue mobilisation has been constrained by low tax base and interference from politicians, a development that has made several district lack money to provide quality services.
The other constraints are poor coordination, inadequacy of information on potential taxpayers, administrative weaknesses and poor utilisation of collected funds.
Speaking at the launch of the report on non-tax revenues in Kampala yesterday, Mr Julius Kapwepwe Mishambi, the UDN director of programmes, said for government to provide adequate and quality public services to citizens without being overly dependent on aid, strategic policies on revenue generation and taxation must be made.
“Local governments need to supplement the central government grants with local revenues. Government also needs to prioritise allocation of non-tax revenue to sectors that will directly improve the well-being of its citizens,” Mr Kapwepwe said.
Uganda’s tax system has undergone fundamental reform in response to the need for funds to support economic and social development. The Finance ministry shows government has intensified tax administration and cut expenditure to attain fiscal discipline. However, non-tax revenues have not been fully utilised.
The study found out that while non-tax revenue performance at the national level has improved over five years from Shs55.69 billion, which represents 1.0 per cent, to Shs402.0 billion which represents 4.10 per cent, it has remained a small proportion of the total revenues.
Mr Kapwepwe said this study was carried out between November and December 2015 purposely to establish the level of transparency and accountability in local government non-tax revenue mobilisation, allocation and utilisation processes with a specific focus on Kayunga and Kumi districts.
Responding to the study, the principal economist in the ministry of Local Government, Mr Johnson Gumisiriza, said multiple taxes are levied on one person which discourages non-tax revenue enhancement in the country.
The report recommends that the central government, MPs, Local Government and Finance ministries should design mechanisms of boosting the local governments with the required technical staff and avail them logistics such as transport and data management accessories such as computers.