URA's VAT stance harming health sector, says minister

Dec 21, 2015

Tumwesigye says the health ministry has a budget shortfall of sh109b in VAT and counterpart funding obligations.

Health minister, Dr. Elioda Tumwesigye, has taken exception to Uganda Revenue Authority's (URA) uncompromising policy on payment of Value Added Tax (VAT), saying its terribly hurting the health sector's capacity to get key donations from abroad.

VAT is a tax on the amount by which the value of an article has been increased at each stage of its production or distribution.

During an interface with lawmakers on the health committee to answer queries about the budget framework paper for the financial year 2016/17 last Friday, Tumwesigye revealed that Ministry of Health (MoH) has a budget shortfall of sh109b in VAT and counterpart funding obligations in the next financial year.

Normally, when altruistic organizations and individuals in foreign countries donate equipment, medicine or vaccine to Uganda, they let MoH to pick up VAT bills.  But the money due to the taxmen is always hard to come by, leading to unsavory incidents of URA either impounding or threatening to impound donated equipment.

"It seems they (URA) are interested in showing a good tax to Gross Domestic Product (GDP) ratio.  But this is hurting the ministry because donors are rarely interested in paying the VAT component," Tumwesigye said.

Last year, Tumwesigye told legislators, URA threatened to attach the equipment of a Construction Company over VAT for constructions at Mulago Hospital, yet the tax component was meant to be met by government which had not yet fulfilled its obligation.

According to budget estimates for the current financial year, URA is expected to raise sh9.5 trillion as government seeks to reduce the percentage of donor component in the national budget.

Meanwhile, the health committee has called for Uganda Aids Commission (UAC) to be relocated from office of the president to MoH for proper oversight and management.

Committee chairperson, Dr. Medard Bitekyerezo and Dr. Twa-Twa Mutwalente contend that neither MoH nor office of the president is effectively overseeing the affairs of UAC.

"The budget of UAC is in ministry of health yet officially its under office of the president. Its budget inflates MoH budget yet its not under the ministry's control. This has to be sorted out soon," Bitekyerezo said.

The committee on the presidency recently noted that UAC ought to be relocated to MoH for its proper supervision.

"UAC should be under MoH because many of its interventions are health related. But this would require an amendment of the statute that created it," MoH permanent secretary, Dr. Asuman Lukwago said.

Parliament recently sanctioned the creation of the HIV Trust Fund as a form of tax component to help government raise enough resources for HIV/AIDS palliative care without over reliance on donors.

Bitekyerezo avers that in the absence of proper oversight over UAC by MoH, these funds can either be squandered through luxuries like high-end vehicles or seminars.

In the same interface, Tumwesigye explained government's delayed plan to launch massive vaccination in areas with the highest Hepatitis B prevalence rate.

Government had intended to vaccinate close to 16 million people in areas of Teso, West Nile and Northern Uganda following an outbreak of hepatitis B almost a year ago.

However, despite parliament in 2014 appropriating $11m (about sh39b)to roll out the first  phase of vaccinations in the worst hit 11 districts,  the program had stalled, resulting into uproar by area MPs.

"The idea was that the money would be enough to vaccinate 16m people. However, this can only vaccinate 3.4m people," Tumwesigye said, revealing that the program has kicked off in the Teso sub region.

The disease is caused by Hepatitis B virus and is prevalent mainly in Asia and Africa. The virus is transmitted by exposure to infectious blood or body fluids such as semen and vaginal fluids, while viral DNA has been detected in the saliva, tears, and urine of chronic carriers.

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