Uganda’s budget rising faster than economic growth- experts
Minister of Finance Matia Kasaija arrives for the 2022/2023 National Budget reading at Kololo Independence Grounds on June 14, 2022. PHOTO / DAVID LUBOWA
What you need to know:
- Experts say the national budget is a development instrument which must be well designed and properly executed.
Global financial experts have expressed worry over the rate of Uganda’s national budget growth observing that “it raises a lot of pressure on its sustainability since government continues to operate a deficit budget.”
Over the last four years, the country’s budget sharply increased from Shs32.7 trillion in FY2018/19 to Shs48.1 trillion for FY2022/23. Uganda’s economy is now at about $45.7billion by the exchange rate method or $131billion by the Purchasing Power Parity (PPP) system, according to government data.
“The national budget is growing faster than the rate at which the economy is growing and the rate at which the tax revenue is growing. Is this sustainable,” asked Mr Prosper Ahabwe, the associate director for tax at Ernst & Young which is an internationally recognized consultancy.
For the firm’s country manager, Mr Geoffrey Byamugisha, the national budget is a development instrument which must be well designed and properly executed.
“The tax regimes should be attractive for investors and a good tax regime makes the country become more competitive,” he said during the Ernst & Young post- FY2022/23 budget breakfast Forum at Sheraton Hotel in Kampala.
Uganda did not didn’t introduce any new tax for its new financial year.
“…but there are some tax rates in Uganda that are higher than those in Kenya and Tanzania. A stringent tax regime scares away investors,” Mr Byamugisha on June 22.
He observed that the East African nation has since been displaced from Africa’s top ten investment destination.
Meantime, the Uganda Revenue Authority (URA) domestic tax commissioner Ms Sarah Chelangat Muzungyo emphasized strengthening and instituting changes in the URA tax administration system to improve tax collection.
“We are strengthening our tax administration and payment of tax through digitization, establishing 24 hour support centres, simplification of tax payment processes and training of the taxpayers,” she said.
Early this week, Uganda announced plans to slap Value Added Tax (VAT) on non-resident service providing companies and internet giants like Facebook.
