UGANDA Revenue Authority (URA) has registered a shortfall of sh108.07b in its tax collections for the first half of financial year 2008/2009. This is partly by the impact of the global financial crisis.
URA pointed out that the collections realised during the period under review were less the targeted sh1,827.95b by about 5.91%.
Despite falling short of the target, the overall trend points to growth in revenue collections compared to the previous year, amid challenges of high inflation rate and fluctuation of the foreign exchange.
â€œThe global financial crisis parlty contributed to the shortfall as some businesses were affected. URA remains optimistic about the second half of this financial year and will continue to encourage compliance through dialogue, enforcement and litigation,â€ URA said in a statement recently.
Compared to the same period in 2007, revenue collections grew by 14.74% to sh1, 719.88b for the period July to December 2008 from sh1, 498.91b in the same period the previous year.
Data shows that gross collections for the period under review increased to sh1, 864.21b compared to sh1632.64b in 2007/08.
URA is optimistic that the second half of the financial year will perform better, in line with the general trend in revenue growth that has characterized the last decade.
To compound the situation, a combination of disruption in supply of fuel and petroleum products experienced during 2008 and expansion projects by corporate players also conspired to undermine revenue collections.
â€œThe interruption in fuel supplies affected collections from petroleum products yet they contribute a significant proportion to International trade taxes. Fuel imports were projected to grow at 5% but only grew by 3.99%.â€
Expansion plans by companies in the telecommunications, manufacturing (cement, beer and clay) has also affected Corpration tax and VAT collections in the short term, URA added.
According to the revenue body, the unprecedented inflation rates in the region (Uganda 14.2%, Kenya 29% and Tanzania 11%) also remain a challenge.
The financial crisis, which continues to dominate headlines, culminated from the sub-prime mortgage crisis that hit the US last year. The global financial meltdown, billed as the worst since the 1920s, has been characterized by contraction in liquidity, leading to credit shortage.
Experts say that the shortage stemmed from undervaluation of real risk in the sub-prime mortgage market, which affected the financial system in the US and adversely affected global financial markets. The impact of the global financial crisis has come sooner than anticipated despite observersâ€™ assurances that it would have a lagged effect on Uganda.
Emmanuel Tumusiime Mutebile, the central bank governor, predicted last year that because Uganda was indirectly linked to the global financial markets, there would be a delayed impact on the economy.
URA Registers deficit