For the second time in as many years Uganda Revenue Authority (URA) is expected to close the financial year with a deficit.
With barely two months to the end of the 2020/21 financial year, URA will have to collect at least Shs6 trillion to fill the revenue shortfall.
Speaking during a dialogue on the economy, Ms Julie Njuba, the URA assistant commissioner business policy, said the tax agency was behind her revenue collection by about Shs6 trillion.
“We need Shs6 trillion to meet our target. This is because by end of April we had only collected about Shs15.6 trillion yet our target for this financial year is Shs21.6 trillion. So, as we speak we are below target and we only left with about two months to go,” she said.
However, Ms Njuba said, URA had put in place a number of measures, among them Electronic Fiscal Receipting and Invoicing Solution to widen tax base.
The impending failure to hit the target will be the second time URA is posting a deficit.
In the last financial year URA closed with a revenue shortfall of Shs3.5 trillion, partly due to a subdued economic environment occasioned by Covid-19.
Dr Fred Muhumuza, the Makerere University School of Economics lecturer, said that whereas tax performance is supported by a booming economy, it was currently difficult to collect enough taxes given a reduction economic activities.
All key sectors of the economy that could have triggered growth, he said, are either recovering from the effects of Covid-19 or largely slowed down.
In the 2020/21 financial year, URA had targeted to collect Shs21.81 trillion, of which Shs20.219 trillion would be tax revenue while Shs1.591 trillion was non-tax revenue.
However, the Shs6 trillion shortfall means that URA has so far collected Shs15.81 trillion just two months to the closure of the financial year.
Boosting tax revenues
In June government is expected to unveil the second budget under the third phase of National Development Plan, projected to be Shs44.7 trillion with domestic revenue contributing Shs21.6 (47.5 per cent).
However, there has been some anxiety about the adequacy of resources for implementation of NDP III and attainment of the country’s development goals.
Experts have noted that for government to realise revenue collection targets, it must reactivate economic activity through providing support to key areas of the economy as well as providing stimulus packages for sectors of the economy that have been affected by Covid-19.
Already a stimulus of up to Shs1 trillion has partly been implemented to boost growth over the medium term. However, there is concern that such stimuluses have not been managed well which will create problems for the economy.