There is bad news coming from Uganda Revenue Authority and the Ministry of Finance Planning and Economic Development (MoFPED).
The latest data on tax collections shows that URA recorded Shs 324bn as revenue shortfall in the first half of the FY2017/18, partly attributed to low levels of economic activities, currency depreciation and the related price hikes for some commodities.
Henry Martin Saka, the assistant Commissioner for Domestic Taxes at URA told The Independent in an interview on March 02 that whereas they have always been confident about hitting targets including this financial year’s (of Shs 15tn), he was equally worried about the current wave of price increases especially of fuel and weakening shilling that could lead to an increase in the cost of doing business and negatively impact on tax collections.
Fuel prices have since last month increased by over Shs400 at most pump stations countrywide crossing the Shs 4,000 mark per litre of petrol and Shs 3500 for a litre of diesel.
The shilling has been relatively stable although has been recently experiencing slight depreciations against major foreign currencies especially the U.S dollar.
“… It is crunch time at URA and we all hope that the annual revenue target for this financial year will be reached,” Saka said.
Whereas it might be early to determine the extent to which these indicators will affect revenue collections at the end of the year, in the recent five years, they have influenced negative growth of the economy that averaged between 4-5%, which is far below the projected 6-7% growth rates of the comparable period before.
This has consequently led to increased cost of doing business, constrained demand, resulting to reduced tax revenues.
For instance, in the last financial year (2016/2017), the tax body recorded a 13% growth in revenue collection but ended up with close to Shs 500 billion revenue collection as shortfall of the Shs 13.2 trillion target.Similarly, the year before that (2015/16), collections grew by 15.6% but with Shs 404 billion as shortfall of the Shs 11.6 trillion target.This financial year 2017/18, the target has been set at Shs15 trillion, 14% higher than last year.