Thomas Tayebwa Fellow Ugandans, I trust that we are all busy trying to stay safe and keeping our loved ones and businesses safe. I must thank the President and all the frontline government workers, especially in health and security agencies, who are putting in extra time in trying to keep us all safe and alive – even when it puts their own lives at risk.
Last week, Bank of Uganda released the business confidence index for March 2020 showing that private sector confidence in the economy has fallen to a three-year low to 54.19 – the lowest since January 2016 when it last hit 53.77.
The Stanbic Purchase Managers Index (PMI) for March 2020 also fell to 45.3, down from 56.2 in February – the first time there has been a deterioration in business conditions since January 2017. Across both indices, business leaders were pessimistic about the near future and said they wouldn’t be hiring or buying supplies.
These reports, coincide with the tabling to Parliament by the Minister of Finance of the various Tax Amendment Bills for 2020, which at first glance point to either increments or introduction of new tax measures – a wrong move at such a critical time, in my view.
My prayer is, these measures, should be aligned to the recommendations of the Taskforce of the Parliament of Uganda on the effects of Covid-19 on the economy that emphasised boosting confidence in the economy by assisting the recovery of aggregate demand making borrowing cheaper and subsequently encouraging spending, which will in turn grow jobs and put money in the pockets of Ugandans. And in, so doing, we should avoid scoring own goals.
For example, at first glance, the proposed tax Bills will have net effect of increasing the cost of doing business, especially to the SMES, especially in agriculture, trade, hospitality, transportation and construction sectors, the same sectors that will be hurt most by Covid-19 related stress.
Let us not forget that some of the key sectors that we are hurting like agriculture, construction and trade/retail, do contribute a combined 60 per cent of employment and more than 40 per cent of tax revenue.
We have been told by government that the banking industry’s non-performing loans could worsen from 4.7 per cent to 5.9 per cent – but banking experts have, however, put the NPLs figure at between 7 per cent to 10 per cent. Again, the worst affected sectors will […]
