Wednesday, April 2, 2014


Last week Uganda Revenue Authority (URA) reported that while tax collections have not met pre-set targets they continue to grow compared to the same period in the previous year.

In addition the Authority’s officials that in successive months the difference between the collections and the projections has continued to narrow and while revenues may not fully bridge the deficit by the time we get to the end of the financial year, they expect the trend to continue into the new financial year.

 For the period July-February projected tax collections were sh5,452b but receipts fell short by sh270b coming in sh5,181b. However revenues during the period were 13 percent higher than the collections during the same period on 2012/13 when sh4,573 was collected.

Beyond the numbers there are some interesting details to take away from the latest URA release.

For at least the last two years Richard Kamajugo, Commissioner Customs says, the collections from domestic revenues have outstripped taxes from international trade. This is the final stage of a progression that begun with removal of taxes on exports in in the late 1980s. It’s hard to believe now but export taxes accounted for six in every ten shillings of revenue the government collected in 1986. 

Now we get zero taxes from exports.

And for a long time taxes on imports, particularly petrol dominated our receipts and when there were problems with petrol supplies into the country they would deal a major blow to our tax collections in that year. Now domestic taxes --  income taxes, VAT and withholding taxes, dominate which is not only a healthy thing but how things should be.

This one indicator alone suggests that one, we getting more and more people into the tax net who were not there before but additionally points to growing production locally, we are meeting more and more of our requirements internally.

Another interesting development and very much related to the above is the way VAT has increasingly become a major tax head. In 1996 when it was introduced the Uganda Importers, Exporters & Traders Association (UGIETA) – the precursor to today’s KACITA (Kampala City Traders Association) opposed it, went on strike and lamented how the system was unworkable, would collapse many businesses and they would rather remain with the antiquated sales tax. Two decades down the road and we are still here and the numbers of traders has probably jumped tenfold in the interim. It just goes to show that what is popular is not always right.

A country’s revenue collections tell an interesting tale of whether an economy is on the up or not. Country’s are only as viable as their private sectors, business pays the taxes that finances the public goods – security, infrastructure and social services that not only improve the ease of doing business but also provide the ladders that allow for social climbing by the lesser fortunate.

So in country like Uganda which while well-endowed with natural resources has not exploited them, the fact that revenue collections continue to grow says something about the economy and believe it or not points to growth there even if we don’t feel – yet!

And finally almost mentioned in passing in this report is that fuel volumes into the country jumped by almost a third compared to the same period last year. According to URA this was largely due to the EAC Single Customs Territory clearing procedures which make it easier for fuel merchants to clear their cargo.

Probably an interesting case of our travels increasing to match the new increased volumes of the fuel coming into the country.

A country’s level of economic development can often be judged by its energy requirements per capita. Increasing fuel imports suggests more economic activity.

Our tax collections at 12 percent of GDP remain below the Sub Saharan average of 16 percent but progresses is being made. 

Now if only URA could collect ground rents from the rich and famous in Kololo, Ntinda, Bugolobi and Mutungo ….

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