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INTERVIEW: High tax rates fuel corruption in customs

Doris Akol and Kunio Mikuriya

Recently, Uganda hosted members of the World Customs Organisation (WCO) hailing from 24 countries of East and Southern Africa (ESA) for a two-day 22nd governance council to discuss matters tax administration. The Independent’s Julius Businge jointly interviewed the organisers – WCO Secretary General Kunio Mikuriya and Uganda Revenue Authority Commissioner General Doris Akol about the relevance of the meeting and other global tax issues.  

How is the global customs environment faring at the moment?

The global economy is basing on the work and reforms for customs administrators to facilitate trade and ensure economic competitiveness. Customs are working towards fighting terrorist threats and managing border weaknesses. The other bigger picture covers issues of drought that hit Southern and Central Africa for the last two years. This has partly affected revenue collections from agriculture and related activities since the sector contributes big numbers to Africa’s Gross Domestic Product. We are informed that researchers and governments are working hard to manage the problem.

How important was this meeting to Uganda and ESA members in line with tax administration and related reforms?

This meeting was purposed to put together some discussions on issues that guide customs institutions in the region. The countries in ESA are united by customs administrations. The challenges and opportunities that we face are similar. Some of the things you are seeing in Uganda are actually happening in the rest of the region. The coordinated border management approach that you see; one stop border points, the electronic single window, the electronic cargo tracking system are best practices happening in the ESA region. We have been here to discuss other initiatives that can be rolled out across the region with specific emphasis on not only revenue generation but increasing trade facilitation which is the most important role of customs administration in the world. The deliberations sought to create solutions to increase and improve our revenue collection. The ESA region is one of the most vibrant regions within the WCO and thus, having a common approach to managing tax matters is a good thing.

How has Uganda Revenue Authority performed in all work aspects of the WCO over the years? 

We are happy with the progress URA is making in the areas of tax administration.  Prior to this meeting we visited the authority’s document processing centre, the electronic cargo tracking system that is linking Kenya and Rwanda. We realised that URA’s ambition is much bigger. This is a typical example demonstrating how customs can ensure connectivity at borders. WCO motto is borders divide, customs connect. What we saw during the visit was great work; good technology for customs. URA is facilitating trade locally and internationally by ensuring security at borders. This is good for boosting the economy and leading to prosperity.

At global level, what key aspects of economic activities are necessary for bolstering economic growth and development for poor regions? 

We believe the component of regional integration is important when it comes to boosting intra-Africa trade. Infrastructure investment is important and connecting people and goods at borders is critical. We realise that many investors are interested in coming to Africa to invest because of the many natural resources opportunity available. Investors are supporting African customs reforms and monetisation. Customs should enhance their corporation in the fight against illicit trade, money laundering and terrorism.

How is the work of the WCO helping poor economies like Uganda that needs capacity to manage complicated matters like transfer pricing that are partly responsible for revenue shortfalls?

Our mission is to increase efficiency and effectiveness of our members. We set standards for customs procedures, promote international cooperation and provide technical and capacity building for our members. We do work around securing and facilitating trade supply chain and fighting elicit trade. We continue to work closely with our 180 customs administrations to implement those standards. Uganda is serving well our mandate. When I visited URA I could see familiar faces busy doing professional work. We are working closely with the East African Community where Uganda belongs on areas to do with implementing WCO tools to gain competitiveness and deal with such tax loopholes. We are happy that Ugandan customs experts that we train are becoming competent enough to be hired by WCO to train and offer assistance to other countries in Africa.

What would be your advice to countries like Uganda on how best to deal with taxation problems of informal trade, corruption, limited skilled personnel, poor accountability and technology gaps?  

At global level we have guidelines that help customs administrators to manage these things. We realise that high taxes, too much procedure involved in tax processes and payment are responsible for the occurrence of some of unprofessional behavior. We also think that managing these problems needs political will. Corruption reflects what is happening in the entire society. Governments and customs administrators need partnership approach with the private sector to deal with these problems.

What is your view on countries like Uganda that are slowly moving away from external budget support to increasing domestic revenue mobilisation to fund own budget priorities?  

WCO works to enhance domestic resource mobilasation. If you want to reduce donor dependency you need to collect more revenue more efficiently. WCO provides tools and guidelines to boost such plans. Our members are free to use the guidelines to meet their customs plans.

What is your reading about the outlook for customs activities under the ESA region?

We are going to see more coordination amongst ourselves so as to deal with challenges of illicit trade, challenges of terrorist financing, counterfeit marketing, technology hitches, diversion of goods and others.

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