Expert ask URA to mine new tax streams

Renowned Makerere University economics lecturer Fred Muhumuza

What you need to know:

  • Mr Muhumuza explained that Covid-19 accelerated the new era of working virtually and that if URA doesn’t devise new means of collecting taxes from such new methods of work, chances are high that they won’t be able to hit their annual collection targets

Renowned Makerere University economics lecturer Fred Muhumuza has called upon the Uganda Revenue Authority (URA) to devise new mechanisms of collecting taxes in the post Covid-19 era, arguing that some of the post Covid-19 work methods have gone digital.
Mr Muhumuza explained that Covid-19 accelerated the new era of working virtually and that if URA doesn’t devise new means of collecting taxes from such new methods of work, chances are high that they won’t be able to hit their annual collection targets. 

“Human beings, when they earn a salary; they are able to reach out to pay taxes, consume food, educate their children. So human beings drive the economy when they get their salary, they pay Pay As You Earn (PAYE), rent a house, eat food, seek treatment, now if all these people are going to be replaced by an ATM, an app,”Mr Muhumuza said in Kampala on the sidelines of a tax event organised by Signum Advocates.
“Technology is the main driver now but we are going to have a problem of how we sustain the economy. The current crisis we are going through, Covid partly accelerated it but that disruption was already going on in the economy due to technology,” he added.

New normal
When Covid-19 struck in March 2020, many companies started working virtually in a bid to ensure social distancing as one of the measures the Health ministry advocated for in a bid to fight the spread of the virus. 
Despite the infection rates going down, some companies have continued to encourage their employees to virtually work from home.
Going forward, the development policy expert urged the tax man to come up with a good tax system to match the new virtual work trends.

“So now we need a very good tax system, to tax the companies driven by technology at heavier rates more than even the 30 percent so that you can raise enough money to look after the unemployed citizens through unemployment benefits and other mechanisms because now we can’t do away with joblessness, that is what technology means,” he advised. 
He also said Uganda needs to look at integration with its neighbours if she is to sell more.

Efforts to reach out to Mr Ibrahim Bbosa, the URA spokesperson, on what new mechanism they will devise to counter the technological work innovations that are by-passing taxes, were futile by press time last evening.
But speaking at the same tax event, Ms Sarah Chelangat, one of the commissioners at URA, encouraged Ugandans to be patriotic and pay their taxes to boost the economy.
URA is a government revenue collection agency responsible for enforcing, assessing, collecting, and accounting for the various taxes imposed in Uganda.
 

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