We will not introduce new taxes next financial year, says Ggoobi 

Recruit new taxpayers. Instead of introducing new taxes and increasing existing ones, Mr Ggoobi (L) says government will work around recruiting new taxpayers as a means of widening the tax base. PHOTO / FILE

What you need to know:

  • The Ministry of Finance says that instead of introducing new taxes and increasing existing ones, it will expand the tax base by enrolling more tax payers. 

Government has ruled out introduction of new tax or increase in existing ones during the 2023/24 financial year. 
The move seeks to support the private sector to sail through a difficult economic environment, characterised by high inflation and subdued demand. 
However, government has also indicated that there will be no tax cuts during the 2023/24 financial year, noting that attention will be focused on supporting economic productivity, implementation of reforms and enhancing efficiency in the public sector.

Speaking in an interview last week on the side-lines of a joint news conference between the International Fund (IMF), Finance Ministry and Bank of Uganda, Mr Ramathan Ggoobi, the secretary to the Treasury, said instead of introducing new taxes, government will recruit new taxpayers to expand the tax base. 
“We are not going to increase or introduce new taxes. Increasing taxes in most cases falls on the same people who are already paying. We will be expanding the tax base by enrolling more tax payers and expanding things to be included in the tax system,” he said, noting that implementing reforms will be key and one of the ways through which the tax base will be expanded. 
For instance, Mr Ggoobi noted, government had historically supported the private sector to invest in difficult sectors of the economy through provision of incentives or tax exemption, some of which have been abused. 
“We want to know what criteria we are using and have open and clear avenues to tax incentives or exemption,” he said. 
Tax incentives and exemption have always been questioned by many Ugandans given that they largely benefit foreign investors. 

Data indicates that as much as Shs1.5 trillion is forgone annually due to tax incentives and exemptions.  
Mr Ggoobi said through rationalism of tax incentive and exemption, the Ministry Finance will seek to expand the tax base, and have in place a monitoring framework, which measures progress of beneficiaries and the benefit to government. 
Through rationalising, he said, there will be questions and answers such as whether there are investments in the country, which would take place with or without incentives and how efficient exemptions are to the country, beneficiaries and citizens, as a whole.

It has been estimated that government loses 2.1 percent of revenue due to tax incentive and exemption yet the country’s tax to gross domestic product ratio remains one of the lowest in East Africa and sub-Saharan Africa.    
Therefore, Mr Ggoobi said, government has put in place mechanisms to save at least 0.1 percent of the tax to gross domestic product losses with the view of achieving a tax to gross domestic product ratio of 20 percent. Tax to gross domestic product ratio currently stands at less than 12 percent. 


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