_______________

OPINION

By Mary Karooro Okurut

President Yoweri Museveni managed to salvage a temporary settlement between Kampala‘s traders and the Uganda Revenue Authority (URA), staving off a strike by the traders that had paralysed business in down-town Kampala for a week.

The President‘s intervention of having a dialogue with the traders once again brings to mind his God-given gift of elastic patience.

His ability to patiently listen to people and giving them ample time to voice their concerns, is not something that many people have a claim to.

It was vintage President Museveni: Although, by virtue of his position, he more than anyone else appreciates the need to increase our resource envelope to finance our budget deficit, he appreciates that for tax administration to be effective, it must secure buy in and compliance from the taxpayers.

So, where URA was using the threat of penalties and sanctions to secure compliance, the President invited the traders — 61 of them from the Kampala Capital City Traders Association (KACITA), Federation of Uganda Traders Association (FUTA), United Arcades Traders and Entrepreneurs Association (UATEA), and the Uganda Dealers in used clothes and shoes, for a conversation with the tax administrators URA and Ministry of Finance.

The result was a temporary compromise in which the traders agreed to reopen their shops and arcades for business, URA agreed to suspend penalties for noncompliance under the new Electronic Fiscal Receipting and Invoicing Solution (EFRIS), and both agreed to await on a substantive meeting on May 7, in which the President would permanently resolve the matter following wide consultation with all relevant stakeholders.

But it was the question the President asked the traders on his X account following the meeting that all of us must reflect on. “Do we want to build our country Uganda or other countries by trading in goods produced by them?”

This question is in keeping with the President and the NRM Government’s consistent effort to make Uganda a self-sustaining economy by boosting our industrial output to substitute our imports and expand our export base. Achieving this requires massive investment in industry-enabling infrastructure like roads, railways, electricity, and security, which in turn means we need a bigger resource envelope from which to pick.

The responsibility of devising more avenues for tax is the Government’s, of course. But as citizens, we can play our part by ensuring that we pay our fair share of the designated tax, and for especially government bureaucrats, ensure that we spend the collected tax responsibly, that public works and projects are implemented and executed on time, and that they pass a value-for-money audit.

Fiscal responsibility is particularly important for us because a significant part of our budget is financed by debt, on which we have to pay interest using our tax revenue.

It matters, therefore, how we utilise acquired debt and whether it goes to the purpose for which it was acquired.

Yet our record on utilisation of borrowed funds has so far been less than great. Most of these funds are meant to finance priority public infrastructure projects defined as “core” in our national development blueprint — Vision 2040 and its five-year national development plans (NDPs), yet successive NDPs have pointed out slow execution of these projects as a problem. This is what NDPIII (2020-2025) notes: “The implementation of core projects under the former NDPs has been slow, adversely affecting growth and job creation and undermining Vision 2040.

Out of the 42 NDP II core projects, only 17 are on schedule, while five are under implementation, but behind schedule. The rest are either only at the feasibility stage or have not yet started.”

Such below-par performance is why the President has repeatedly criticised the government bureaucracy as “saboteurs” undermining the Government’s socio-economic transformation agenda. In the long term, it also undermines tax compliance as taxpayers evaluate whether they are receiving due public goods and services for their taxes.

The other aspect critical to our resource mobilisation and tax administration effectiveness is the issue of tax justice, which basically is an assessment of whether our tax system is progressive and whether everyone is meeting a fair share of their tax obligation commensurate to their level of income.

The President has for example been consistently against punitive taxes that affect, especially the lowest income earners like the “mama mbogas”, those selling gonja, hawkers and street vendors, and instead advocated for those on the opposite end of the income pyramid like multinational companies, to pay their fair share of corporate income tax.

Today, Uganda has one of the most favourable incentives for investment, among which are generous tax holidays and exemptions. These incentives are meant to attract investors to invest in Uganda, create employment opportunities for Ugandans, and overtime generate tax revenue for the Government after the investors recoup their initial investment.

But these initial exemptions also mean a reduction in tax revenue for the Government and are globally the biggest source of revenue shortfalls, especially developing countries.

In the outgoing financial year, for example, Uganda lost up to a whooping sh2.8trillion according to estimates from URA.

This is approximately 6% of our total national budget for the incoming financial year! The people at the Ministry of Finance must, therefore, begin to do a cost-benefit analysis of these tax exemptions, and to assess whether the targeted benefits from them significantly offset their cost on the country’s revenue basket.

This is a conversation we must have collectively as a country as we each rise to meet our share of obligation to raise more revenue for the collective betterment and transformation of our country. The President is leading the way, and we must not burden him with a disproportionate share of responsibility. We should all do our part to support him, thereby supporting our country.

The writer is a senior presidential adviser on public relations