Alternative Options for Domestic Revenue Mobilization for Uganda
By Zuriat Nakayenga
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Government revenue is the strategy used to generate cash to be used by Government entities to fund their day-to-day operations. Normal tactics like tax collection, application fees, and levies are used to collect revenue.
On 25 January 2024, the National Budget framework paper for 2024/2025 to 2028/2029 was tabled to Parliament by the Minister of State for Finance, Planning and Economic Development (MOFED).
The budgetary priorities highlighted in this paper were Peace, Security, Roads & Electricity. From the key discussions, the Government was advised to gradually scale down on external borrowing which stands at Shs 80.8 trillion.
The main source of any Government’s revenue is taxation, however, looking at the Budget for 2023/2024 with the theme of “Monetization of Uganda’s Economy through Commercial Agriculture, Industrialization, Expanding and Broadening Services, Digital Transformation for Market Access”, out of the UGX 52.7 trillion planned expenditure, Government envisioned to collect UGX 29.7 trillion from tax and non-tax revenue which is almost 55%.
The Government hence looks at alternative sources like borrowing and financial aid to fund the 45%.
There is still a huge opportunity and untapped tax base for the Government to increase domestic revenue collection through Taxation and non-tax revenue.
MOFED should consider prioritizing building public trust. The government must demonstrate to its taxpayers that the tax paid is put to good use.
Tangible evidence is necessary in the form of the construction of good public and feeder roads that reach the ‘muntu wawansi’, improve public health service and consider rolling out a robust health insurance for all ‘borrow notes from Obama care and Kenya’s Universal health coverage.
A Ugandan should not be seen dying due to failure to access essential healthcare.
The government should add tax education to the curriculum right from primary school to tertiary institutions to increase awareness on the importance of paying tax and to reduce tax evasion and tax avoidance and limit public protest taxes.
The recent protests like Kikuubo traders taking to the streets to demonstrate against ‘EFRIS calling it a tax’ can be avoided. Obtaining Tax identification Numbers and filing of returns should be made compulsory.
In Kenya today, small Government bonds can be accessed through ‘Mpesa’, a mobile money platform. The Government of Uganda has got to rethink its strategy on how to fund the 45% Budget in F25/26 through optimizing tax collection and devising strategies to tax the informal sector.
To diversify its revenue, the government can consider leveraging on royalties from natural resources like oil, gas and minerals.
More effort should be put in strengthening the role of public-private partnerships in delivering capital-intensive public projects such as the express highways, and bridges accompanied by the creation of social impact bonds.
CPA Zuriat Nakayenga is a Member of the Taxation and Economic Policy Panel of the Institute of Certified Public Accountants of Uganda (ICPAU).
