As it stands now barely a million workers are paying income tax out of a workforce of 11 million
By Patrick Bitature
In the middle of September, the UN released its annual Human Development Indicator (HDI).
This index serves as an indicator of the quality of life of a country’s people by measuring the health, education, inequality, poverty and security standards. Aside from the statistical measures of development like GDP growth, this is obviously a better measure of how people are doing.
In this year’s HDI report, Uganda was ranked 162 out of 189 countries with a HDI score of 0.516. The index goes from zero to one, the nearer you are to one the better. Our score puts us in the low human development category.
But as bad as that sounds we have been worse.
In 1990, the earliest year that these figures were compiled our score was 0.311 even the UN recognises that we have improved 66% in the last three decades.
According to the UN figures, life expectancy has risen to 60.2 years from 45.5 in 1990; expected years of schooling has doubled to 11.6 from 5.7, as have the average years of school which are up to 6.1 years from 2.8 years.
We have come a long way, but to paraphrase Nelson Mandela, no sooner have you climbed one hill than you realise there are many more to climb.
Currently, we are committing increasingly more of our budget to infrastructure development --- roads and power generation. Which makes sense.
As it is now Uganda has about 16 km per 1000 square km of land area, while an average middle-income county has about five times that figure at about 80 km per 1,000 square kilometres. On power, using consumption as an indicator, according to the International Energy Agency’s (IEA) latest figures Uganda’s consumed less than 111 kwh per capita compared to neighbouring Kenya 167 kwh per capita and the island state of Mauritius punching above its weight at 2,183 kwh per capita.
The importance of adequate infrastructure cannot be overemphasised. A robust infrastructure network improves the ease of doing business by increasing efficiency in production, distribution and consumption of goods and services. Increased economic activity should lead to higher revenue collections which will pay for investments in social services and creating new infrastructure stock.
The deficiencies everywhere you turn, be it in infrastructure or human development means that hard decisions have to be made in prioritisation and sequencing.
We are between a rock and the proverbial hard place. We can either prioritise, funnel more and more funds into select sectors and let the rest make do with the left overs, or spread our resources so thin that it is impossible to be effective.
But in addition, to help this cause we need to widen our tax base, so that more and more people carry the burden of supporting this country’s development ambitions. As it is now we are collecting about 14% of GDP, a figure that has inched up from 12% a decade or so ago. The sub Saharan Average is 16%.
This is important because without increasing our revenue collections it will be impossible to bridge the deficits ourselves or borrow abroad to salvage the situation.
As it stands now barely a million workers are paying income tax out of a workforce of 11 million. The Government is trying to use a series of indirect taxes – fuel duties, mobile tax and OTT to try and make this happen.
The logic is simple we can have all the beautiful statistics about economic growth, but if this growth is not spread more evenly through the elevation of of the lifestyles of more and more people there will always be grumbling.
Writer is the chairman of the Private Sector Foundation of Uganda