Major tax heads below target a month to closing financial year
What you need to know:
- The report indicates that all major tax heads, including withholding tax, corporate tax, value added tax and excise duty registered shortfalls thus impacting domestic revenue collection for the month ended April
A report by the Ministry of Finance has indicated major tax heads returned shortfalls, which is likely to impact tax collections a few months to the end of the 2022/23 financial year.
The report, which was published early this week, indicated that all major tax heads, including withholding tax, corporate tax, value added tax and excise duty registered shortfalls thus impacting domestic revenue collection for the month ended April.
The report by the Ministry of Finance Macroeconomic Department indicates that withholding and corporate tax registered a shortfall of Shs31.06b and Shs6.09b, respectively. The shortfalls are expected to impact final revenue collection for the 2022/23 financial year, which ends on next month.
The report indicates that domestic revenue collections during April amounted to Shs1.84 trillion, an 89.5 percent performance rate against a Shs2.06 trillion target.
Both tax and non-tax revenue collections fell below targets for the month.
Tax revenue amounted to Shs1.75 trillion while non-tax revenue amounted to Shs91.74b.
“All major tax categories registered shortfalls during the month. Direct tax collections amounted to Shs542.45b against a target of Shs591.1b thus a Shs48.65b shortfall during the month,” the report notes, noting that the shortfall, was however, offset by the Shs7.06b and Shs3.53b surplus under pay as you earn and taxes on bank interest respectively. Similarly, indirect tax collections during the month were below target with both value added tax and excise duty collections being lower than the target by Shs16.95b and Shs12.62b, respectively.
The underperformance for excise duty was mainly on account of lower collections under spirits, soft drinks and phone talk time, among others while the lower than planned performance for value added tax was due to lower collections under beer and cement on account of a decline in sales volumes.
Taxes on international trade and transactions continued to post significant shortfalls with collections declining to Shs724.95b, which was Shs90.92b lower than the target.
The report indicates that government spending was short of the plan by Shs849.25b while revenue and grants were short of target by Shs335.01b.
Overall, government expenditure stood at Shs2.45 trillion, which was lower than the planned Shs3.3 trillion.
The report indicates that expenditure on salaries stood at Shs423.76b while non-wage recurrent and domestically financed development expenditure stood at Shs810.61b and Shs738.91b, respectively.
Expenditure on externally financed development projects stood at 9.1 percent of what had been initially planned.