Gov't blames revenue collection shortfall on underperformance of taxes

Thursday September 16 2021
fin011pix

Uganda currency notes. Total expenditure during the month amounted to Shs 2.6 trillion translating into 82.1 percent performance against target. PHOTO | FILE | NMG

By MARTIN LUTHER OKETCH

KAMPALA. Despite the shaky economic activities in the country, government domestic revenue collections amounted to Shs1.537 trillion, representing a 90 percent performance against the target for the month of August.

In the economy performance report for the month of August 2021 a copy seen by Daily Monitor, the Ministry of Finance, Planning and Economic Development says this shortfall resulted from the underperformance of all major tax heads and non-tax revenue categories.

It says during the month total tax collections were Shs1.460 trillion), an equivalent of 93.6 percent against the target while non-tax revenues performed at only 52.2 percent of the monthly target.

“Direct domestic tax collections amounted to a shortfall of Shs10.57 billion or 97.6 percent, on account of underperformances by corporation tax and withholding tax collections under Government securities,” the report reads in part.

According to the report, indirect domestic taxes were affected by the underperformance of Value Added Tax (VAT) on manufactured goods such as beer, cement and soft drinks. 

“Overall collections amounted to a shortfall of Shs 79.67 billion or 82.9 percent against the target.”

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The report further reveals that taxes on international trade and transactions amounted to Shs 644.57 billion, posting a shortfall of Shs 29.25 billion or 95.7 percent against the monthly target. The performance under this tax category was affected by lower than projected collections under import duty, as imported taxable goods were lower than expected during the month.

“On the other hand, Project grants received during the month amounted to Shs160.80 billion higher than the target of Shs139.94 billion. These grants were mainly from the Global Alliance for Vaccines and Immunisation (GAVI) and Shs88 billion from the World Bank towards the Development Response to Displacement Impact Project under the office of the Prime Minister,” the Ministry of Finance explained.

The report also notes that Government operations during the month of August 2021 resulted in an overall fiscal deficit of Shs958.79 billion which was lower than the planned deficit of Shs1.388 trillion). This performance was attributed to lower than planned expenditures.

Expenditure

Total expenditure during the month amounted to Shs 2.6 trillion translating into 82.1 percent performance against target. This was on account of lower than planned spending under wages and salaries, other recurrent and domestic development activities.

During the period, Wages and salary payments amounted to Shs 442.09 billion or 84.7 percent against planned levels and is explained by delayed recruitment in several MDAs as the Government continues to implement restriction measures to curb Covid-19.

Expenditure on other recurrent and domestic development was worth Shs 635.73 billion and Shs 519.56 billion, each performing at 79.5 percent and 47.8 percent respectively against their targets for the month.

The finance ministry, pointed out that this performance was explained by front loaded payments which were made during July 2021. However, expenditure for externally financed projects amounted to Shs 712 billion representing a performance of 135.5 percent against the monthly target. The bulk of this spending (about Shs 380 billion) was geared towards municipal infrastructure projects.

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