Uganda: Plug tax gaps to finance budget – Members of Parliament

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Government is urged to consider non-taxed areas and those with revenue leakages as a way of raising revenue.

Members of the Budget Committee aver that this would bridge the budgetary gaps that have kept key priorities unfunded for years

The proposals were made during the committee’s interaction with officials from the Ministry of Finance led by the State Minister, Hon. Henry Musasizi on Wednesday, 24 January 2024.

Led by the Chairperson, Hon. Patrick Isiagi, the committee asked government to recoup the revenue collections from the Entebbe Express road toll, which they said Uganda Revenue Authority (URA) has failed to collect.

MPs said that the express way collects Shs3 billion per month but only Shs7 billion annual revenue has been declared to the committee.

“For the express highway, billions have been collected but URA has failed to account for that money yet the law requires that all revenue should be remitted,” said Hon. Geoffrey Ekanya (FDC, Tororo County North).

Ekanya added that there are leakages in revenue collections especially in the gaming and lottery and mining sectors.

“These and several others can raise revenue to the tune of Shs4 trillion that can finance services that are not budgeted for,” Ekanya said.

Ekanya asked the Finance Ministry to watch over procurements, such as those on government vehicles, saying the wastage therein if controlled could significantly support the budget.

The committee emphasized the need to tax gold saying it is the leading foreign exchange earner whose tax exemption they did not support.

“Before we passed the Mining and Mineral Act 2022, URA indicated that it was able to collect only Shs3 billion out of the Shs45 billion tax arrears from gold miners. We are saying this is the highest foreign exchange earner and we are getting no revenue to government; who owns these gold refineries?” asked Hon. Paul Omara (Indep., Otuke County).

Omara also asked the ministry to recover all taxes that were not paid by Bujagali Energy Ltd amounting to US$63 million during the first five years of development of the project, and US$342 million for overpaid fees as per the forensic audit by the Auditor General.

Legislators did not spare what they described as unprofitable operations of Uganda Airlines that government plans to finance for 20years.

MPs asked the ministry to scrutinize the operations of the airlines and cure what West Budama North East MP, Hon. Fox Odoi Oywelowo termed as a sacrilege.

“Ever since Uganda Airlines started flying to Dubai, Johannesburg, Lagos, and Mogadishu, it has never departed or arrived in time. Every late departure or arrival costs US$5000. To expect the taxpayer to carry this burden for 20 years is an act of malice against our people, it is a sacrilege,” Odoi Oywelowo said.

The committee recommended that with such recoveries, government should finance critical areas such as the operationalisation of the 10 new cities, the ongoing externally funded projects lacking government contribution, the tourism roads, and the upgrade of Akii-Bua Stadium as the country plans to host the African Cup of Nations games in 2027.

“On 01 July 2022, the creation of 10 new cities was effected. Each city is asking for Shs1billion to build headquarters and cover other administrative needs to operate. I think this should be a priority in the next budget,” said Hon. Martin Ojara Mapenduzi (Indep., Berdege-Layibi Division).

Musasizi admitted that there are plans to expand development financing options.

“Government is taking steps to leverage additional financing from innovative resources. We are in the process of implementing the Public Investment Financing Strategy which should ensure debt sustainability,” Musasizi said.

The Minister also offered clarity on the public debt and domestic arrears provided by different government entities.

Musasizi revealed that the public debt stands at Shs86.3 trillion adding that the Shs96 trillion from the Office of the Auditor General could include domestic arrears which stand at Shs2.7 trillion.

Musasizi said that there is a three-year digital strategy launched by URA that will automate the tax processes and reduce revenue leakages.

“Identification and tracking status of service offerings across the URA value chains will be implemented.  Integration of URA payment platforms, Bank of Uganda payment platforms, and local government systems will be implemented,” said Musasizi.

Distributed by APO Group on behalf of Parliament of the Republic of Uganda.