Extending tax base to meet current crisis in Uganda

trueBy James Galabuzi Mukasa

The Western world has slowly continued ceasing aid to Uganda. One may wonder how their reasons for that connect with grants meant to support livelihood of a poor person deep in village. Little did we know that these Grants had a hidden condition!

Anyway, I strongly believe that time is now to start creating ways and means of meeting our national needs through proper utilisation of available resources we have, land being the biggest.

 In any a nation, citizens appreciate their existence when basic necessities  are realised like good infrastructure, good civil service where civil servants like doctors and teachers, among others are healthy and well paid. The nation can’t produce good citizens when the basics are neglected because they are vital in our lives.  To attain the afore stated, the Government has to strategise on how best taxes can be collected in order to execute its mandate. Anyway, all Governments in the World survive on taxes.

Expanding the tax base, though not pleasant, is the only way to address the current funding gap. Statistics shows that Uganda is 80% dependent on agriculture. If I may estimate Uganda to have a population of 35 million people, then more than 28 million people are in agriculture! The Government should impose very little and friendly taxes on farmers. If each farmer was to pay a direct tax of sh2,000 per acre in a  year, then the Government will collect more than sh50b from agriculture alone.

The Government shouldn’t tax idle land, but land used economically. People engaged in commercial farming are reaping big in untaxed sales. In a single harvest on a well-organised farm, farmers reap not less than sh500,000 in a single harvest yet they have two harvests in a year which means that in total they reap a minimum of sh1m in an acre! Nobody will fail to pay a direct and friendly tax imposed, especially if its cause is known and is realistic.  This system will also reduce on the rate of land theft since details of the land user and land owner will be entered in the Government data base.

 Cooperative Unions should be re-introduced. This will also encourage out growers to participate in ensuring that the supply of agricultural products to the market is maintained.  Farming will be more lucrative since farmers will be assured of good sales through cooperative unions or directly to the market. A local farmer shouldn’t be subjected to any economic challenge but the Government should be in a position to play a big brother’s role. Once a farmer faces direct economic challenges like failure to identify market for his products and the fluctuating prices, they lose interest in farming which leads to low production.  Introduction of a stabilisation fund will easily address this matter well.

Once cooperative unions are fully supported by Government in identifying both local and international markets, many Land Owners and Land Users will start to utilise their land economically. Another way the land owner and land user may benefit from a single piece of land, is to agree to jointly utilise it commercially and share the proceeds accordingly. These two may even decide to lease this piece of land to an investor and reap big.

The Government shouldn’t impose heavy taxes to growing up agricultural businesses but instead assist them to grow up to a certain level when they can employ at least more than five people. Uganda has a high mortality rate of upcoming businesses due to heavy taxes imposed. For instance, Local Governments don’t have enough tax base that they tend to harass upcoming small businesses. Tax threshold to upcoming businesses should be raised up. Once small businesses are supported by the Government to a certain level of self-reliance, they will grow stronger and firm to pay the designated taxes and recruit more employees hence widening the tax base. This will be like feeding a cow which will in turn give you enough milk. The principal is to tax little on many ventures and realise many returns. Uganda Vision 40, lists Agriculture as one of the key factors of achieving it.

In conclusion, the Government should fully support the Agricultural sector by identifying both local and external markets, and also in ensuring that there is a mass production of commercial agricultural products like coffee and cotton, among others, ready for these markets. This will in a long run expand the tax base of Uganda.

The writer is the founder member- Uganda Land Owners Association