Monday, June 19, 2017

SPARE A THOUGHT FOR THE TAX MAN

Long before Christ’s time the tax man was the punching bag. It got so bad that Zacheus had to climb up a tree on Jesus route to hear the message. Had he stayed at ground level his height would have meant he missed seeing the son of man on account of his height – he was a short man, but also because he was an unpopular figure being a tax man and no one would have sympathised with him and allowed him to the front.

The tax man suffers the classic dilemma of the messenger. He does not decide who to collect from, that is determined at the parent ministry, and even if the tax man has a contrary view about the wisdom of collecting from this or that person or entity he really doesn’t have a choice.

In Uganda for the better part of the Uganda Revenue Authority’s (URA) life the chief tax man has been a lady – Anne Brit Aslund followed by Allen Kagina and now Doris Akol.

The month and the financial year is coming to a close.

"The commissioner general is confident that save for the two public holidays – they lose at least sh30b in collections on such days, they should just make their sh13.2trillion target. At the time of our speaking just before the budget reading they had collected about sh12.8trillion...

Akol said the collections had proved a mixed bag in the year with taxes from fuel imports falling in line with less than expected growth in volumes, the economy missing its expected growth target of 5.5 percent to come in at under four percent, taxes from personal incomes underperforming, all of which it is expected will be countered by strong returns from the banking industry.

To meet the ambitious targets under such circumstances points to something more.

To get an understanding of the enormity of the challenge one has to look back at least a decade. Ten years ago URA collected sh2.6trillion a figure that is set to increase at least five fold this year. In effect revenues have grown an average of about 17 percent a year in shilling terms.

For a long time, ever since the introduction of VAT in 1997, there have been no new tax heads introduced. So these gains have been due to the growing economic activity during the period and improvements in administration.

Our tax base still remains small at about 14  percent to GDP compared to the sub-Saharan Africa average of 20 percent but there are incremental giants year on year should lend us some comfort.
Akol is confident that with the introduction of the digital tax stamps, especially in customs they will be able to meet or even surpass the next financial year’s sh15.3trillion target.

Efficiencies in rolling out the e-tax and collaborations with KCCA and the Uganda registration Service Bureau (URSB) to spread out the tax net should begin kicking in the next few years.
URA’s performance is critical in the context of increased borrowings to finance our ambitious infrastructure projects.

"According to the budget we will be shelling out at least $900m in loan repayments this year compared to $159m a decade ago, the near six fold increase in repayments being padded by the growing revenue collections over the period...

As our brand new infrastructure comes online be it in power generation or roads or railway the assumption is that these will spur new economic activity, which URA can then tax.

The naysayers argue that this new economic activity may not materialise and we will still be saddled with these onerous debt payments. But our history has shown there is still a lot of suppressed demand, which shouldn’t come as a surprise given the existing infrastructure deficit, which attempts to bridge are not keeping up with population growth at the bare minimum.


He tax man or woman is hard person to sympathise with, especially in our case where the history of bribery and extortion follow them around like a bad stench. But spare a thought for them as they go about their thankless jobs, which if they didn’t do well we really would be up the creek without a paddle.

1 comment:

  1. If you need your ex-girlfriend or ex-boyfriend to come crawling back to you on their knees (even if they're dating somebody else now) you must watch this video
    right away...

    (VIDEO) Win your ex back with TEXT messages?

    ReplyDelete