AUTHOR MATSIKO GODWIN MUHWEZI
A lot of ink has been spilled in discussing the anomalies surrounding Uganda Revenue Authority (URA)’s recent directive to banks in Uganda to provide all customer financial behaviour over a stretched period of time.
To even deliver on this Key Performance Indicator (KPI), banks may need to revise their human resource assets and scheduling to cater for another cog in the wheel.
Before I take leave of the general considerations for the ongoing onslaught, I lend credence to the idea that the state of revenue collection and invariably the footprint of a tax base determines whether a government will have the resources to fund its activities.
Secondly, the banking sector survives on cardinal tenets one of which is trusting in a bank to keep a customer’s information confidential.
It would be bad enough for a bank to have a data mole in its personnel, how worse for it to hand over its clients’ details “fwaa?” There will also be interpretation challenges on the sections of the law relied on by URA to claim such an overreaching mandate as well as egocentric muscle flexing with traditional bank regulators and professional bodies.
Of-course inter sectoral information sharing is not new even for banking. The Know Your Customer (KYC) requirements for most transactions, the Financial Intelligence Authority (FIA) oversight and URA investigations from time to time are few of the legitimate exceptions to sacrosanct confidentiality requirements.
This is usually to fight money laundering, manage risk / exposure and properly evaluate assets against which facilities are granted.
In recent times, outcries on Uganda’s fiscal regime have been majorly centered on questionable spending such as: the junk chopper saga, the fighter jets, election cash flows, involvement in foreign peace keeping missions and the civil service wage bill.
Granted, there have been some deliberations on if we have effectively harnessed natural resource revenues and if we need to ring fence oil and gas windfalls for infrastructure but the minimal expertise in extractives coupled with the secrecy that surrounded the initial Product Sharing Agreements (PSAs) limited public participation at a beneficial level.
The limp of the shilling, the constant strikes for higher pay and accumulating arrears of civil servants speak to the fact that there is a liquidity issue in our country.
To mitigate this funding gap on vital sectors, money has to be found from every nook and cranny. However, if we react rather than chart the course, we could land the nation in dire straits.
URA like most parastatals created every other day is a baby of the present political leadership. It was born from a desire to streamline sectoral performance and ensure service delivery inhibited by large ministries. For the wanainchi, parastatals present remuneration opportunities beyond the meagre civil service retainer.
What some remember about URA is the crack down on smuggling which was led by the recently relieved Inspector General of Police who commandeered an energetic contingent of “Christian Youths” to plug holes at border points and customs.
However with the rumours that URA is planning to selectively tax some men of God, it appears that the reverence for the charitable work of the cross is petering away from its ranks.
URA has done a great job in curbing smuggling and increasing government collections over the years but there is discussion on reducing the number of parastatals; there is no telling yet who will survive the axe.
My concern is that, caught in an off moment of naval gazing, URA could have played Russian roulette with this move on banks. Like wanton lads toying with juvenile experimentation, most Ugandans have indulged in Ponzi schemes at some point. At the very least, we are all guilty by association.
Ponzi schemes usually get off to a flying start, pushing the pioneers up the pyramid of lottery stardom until the base is too weak to support the superstructure and it tumbles down, Humpty Dumpty! Woe unto those who join in the evening of the bonanza.
Uganda is presently pushing for financial inclusion for businesses and individuals still eluding the grid. With only one private social security Fund, a good number of the population still unbanked, hazy regulation of e-transactions, there is a lot of work to be done in getting every Ugandan on the Big Brother financial platform.
Ministry of Internal Affairs is doing its job of registering and giving out identity cards, the people in ICT are working to increase mobile phone coverage, banks are piloting different products by the day and crypto currency is not sleeping either.
If URA hoped to get more money out of the rich Ugandans, getting bank information will not guarantee more numbers.
It will only capture a young corporate’s rental income from irregular tenant payments from units in Zirobwe on Gayaza road.
URA will speculate its assessment and the hapless lank will fail to pay and revert to living hand to mouth. The ultra-rich one percentile will dig tunnels in their compounds and stuff them with Benjamins, move a few more into Swiss Accounts or play some mirage pin-pong of assets via the Cayman Islands.
The old brewer in Kahoko Nyakagyeme, unafraid of poll tax, without any finger print in microfinance will not pay tax despite the aggressive initiative.
End of day, the minority working class paying a huge percentage of their earnings to NSSF, URA via PAYE; internet bundles, taxis or fuel; javas or KFC, daycare and rent will have to fork out another chunk to tick the boxes.
At a time when Facebook is battling one of the biggest data mining scandals, at a time when every app is asking for permission to access contacts, pictures, location; girlfriend number two, bathroom keys and everything in between; a move to pry into people’s financial life does not help the apprehension.
Regardless of whether litigation results from this or URA rescinds its directive, the scare might see a dramatic decline in bank deposits, a reluctance to transact online and move back to paying bride price in actual cows!
This will not be the day I talk about WhatsApp and Facebook tax or the “pornography detecting machine” but oh well. So many macro-economic initiatives may easily have been regressed by URA’s bold step.
The writer is a Lawyer and Author