The taxman is optimistic about future performance
Kampala, Uganda | JULIUS BUSINGE | The Commissioner General for Uganda Revenue Authority, John Rujoki Musinguzi, has an uphill task of collecting taxes from businesses and individuals that continue to face the COVID-19 pandemic hit.
His supervisors at the Ministry of Finance have set targets for him and appears not to bother much about the environment under which he operates.
In the just concluded FY 2020/21, Musinguzi and his technical staff only managed to collect net revenue of Shs19.2tn, a 14.99% growth in comparison to the previous year. However, this is below the Shs21.6trillion target.
The tax body has in the recent years attributed the revenue shortfalls to a bad economy and lately, the COVID-19 lockdown measures.
It closed the 2019/20FY with a shortfall of Shs3.6 trillion; then in the FY2018/19, the shortfall was nearly Shs700 billion. In FY2017/18, the deficit was Shs659billion and in FY16/17 it was Shs377 billion.
However, the top URA executives that spoke to The Independent described the performance for the just concluded FY as ‘very good’ given that they managed to withstand the tough economic [Covid-19] environment during the period.
The tax body posted an estimated tax to GDP ratio of 12.99 percent, representing a 1% growth. In real terms, this reflects a growth in revenue of Shs2.5tn.
“This is the highest growth registered in the last four years,” Musinguzi said at the end of year press conference held at the tax body headquarters in Kampala on July 15.
“It is important to note that this was the target approved by Parliament before the impact of Covid-19 set in and macroeconomic variables that affect revenue such as GDP growth were projected at 6% yet by the end of the financial year GDP growth was at 3%.”
The domestic revenue collections in the FY2020/21 stood at Shs12.14tn, registering a growth of 13.71% (Shs1.4tn in real terms) in comparison to the FY2019/20. However, the collections were below the target of approx. Shs14tn by Shs1.8tn.
Custom revenue collections stood at Shs7.5tn against a target of Shs8tn, registering a significant growth of 16.43% (Shs1.1tn) in comparison to FY2019/20. However, the collections were Shs495bn below the target.
During the same period under review, 71% of the revenue was generated from the top four sectors; Wholesale and retail trade sector which had the biggest contribution, amounting to Shs5.7tn (29.43%); manufacturing sector with Shs4.4tn (22.70%); information and communication sector Shs2.1tn (10.48%), and the financial and insurance services sector contributing Shs1.6tn (8.39%).
There was also growth in revenue from key sectors like manufacturing that recorded a 27.52% growth, information and communication 25.73%, wholesale and retail 19.13% and financial and insurance services by 5.55%.
However, revenue collections from accommodation and food service activities declined by 37.38%, education sector by 10.35%, arts entertainment and recreation by 31.39% citing slowdown in business in the wake of COVID-19 pandemic lockdown.
Revenue collection in EAC bloc
URA had the highest year on year in revenue growth (14.99%) in the East African Community. Tanzania’s collection in FY 2020/21 was 0.1% less compared with the previous year.
However, Kenya, Burundi and Rwanda Revenue Authorities met their targets in the FY2020/21 set in consideration of the Covid-19 lockdown measures.