Why is govt panicky over taxes?

What you need to know:

  • Justification. Government has proposed several tax measures to “enhance revenue collection”. Government says it needs to find solutions to its expenditure which is growing faster than revenue collections.

Faced with a high cost of living and soaring unemployment, Ugandan tax payers will have to dig deeper in their pockets to fund government’s expenditure, effective July.
In several moves tending towards panic, several tax measures have been proposed to “enhance revenue collection” and they are expected to find little opposition in the ruling NRM dominated Parliament.
To justify its moves, government says it needs to find solutions to its expenditure which is growing faster than revenue collections, to expand infrastructure, support electricity production and the oil sector still in its infancy, but also find money to build the long awaited standard gauge railway.
The other considerations in introducing new taxes and raising others, according to Mr David Bahati, the State minister for Planning, are expansion of the economy and covering the gap of reduced collections from international trade taxes due to increase in global trade liberalisation.
It also emerged this week that the government was unable to front its share in the Shs14.6 trillion ($4b) capital expenditure for the proposed oil refinery in Hoima District, and instead relied on the Albertine Graben Refinery Consortium (AGRC) to shoulder its burden for now, as it looks for resources.
The government is also faced with a “debt crisis” with a report by the Parliament’s committee on national economy for the financial year 2016/2017 putting the stock of external debt for both public and private sector at 41.4 per cent from 40.2 per cent in the preceding financial year.
Sources say this has only increased and the 94 years that a parliamentary committee said it would take to repay the existing stock of debt at the current level of amortisation, according to the House report will only be revised upwards.
This is besides the cost of servicing the said debt as the government continues to source for external debt on less concessional terms.

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