Govt set unrealistic revenue targets, says URA 

REVENUE COLLECTION

The Uganda Revenue Authority (URA) has attributed the failure to meet revenue targets for the current financial year to the revenue collection target that was set for them by the Government.

"Our performance is not bad. The problem is that the revenue collection target that was set for us was unrealistic. The projected annual revenue increment used to be sh1.5trillion, but this time it was put at sh4trillion. For the 2019/2020 financial year, they first set for us a target of sh18.3trillion and later changed it to sh19.7trillion and eventually, it was revised to sh20.3trillion. That target was not supported by economic projections," the URA commissioner general, Doris Akol, said.

Akol argued that URA had registered a net cumulative revenue growth of 11.2% having realised sh9,042b in the first two quarters (July-December 2019) compared to sh8,134.9b, which was collected within the same period of 2018. 

For the period of July to December 2019, Akol said URA registered a revenue shortfall of over sh500b, having collected a gross revenue of sh9.2trillion against the target of shh9.7trillion.  

She made the remarks on Tuesday while appearing before the parliamentary finance committee to defend URA's draft 2020/2021 budget.

The MPs had tasked URA officials with explaining why they were registering unprecedented revenue shortfalls in the current financial year. 

The finance committee chairman, Henry Musasizi said: "There are concerns on the poor revenue performance. We would like to know the cause for the poor performance." 

Kumi County MP Charles Ilukor said: "I wonder why after one year of getting a good surplus for which you were even given a bonus, you are performing badly to the extent that the Government is planning to borrow from commercial banks to cover the shortfall."

The Government recently presented a loan request of $600m (about sh2.4trillion) from Stanbic Bank to fund the 2019/2020 budget revenue shortfall and additional demands that arose in the course of the financial year. 

Musasizi also tasked the URA officials with explaining why despite increasing URA's budget to improve enforcement activities, the stock of tax arrears keeps going up.

The finance committee brief indicated that URA stock of tax arrears has been greatly increasing from sh1005.45b in the 2013/2014 financial year to sh3624.8b at the end of the 2018/22019 financial year.

"This means that the stock of tax arrears has grown by sh2.6trillion (260.5%) in five years despite some recoveries done by URA," the committee noted.

Akol explained that the rising stock of tax arrears partly arises from URA efforts of assessing taxes that have to be paid, which were not previously captured. 

Pointing out some of the challenges they are facing, Akol reported that they are experiencing poor performance of under declaration of rental tax, especially from taxpayers registered as corporate entities, who expense the income generated from other corporate expenses.

Akol informed the committee that they would have to amend the laws for rental tax and Over the Top Tax (OTT) for the two taxes to generate more revenue.

The URA commissioner general, however, argued that despite the fact that rental tax was yet to fetch the anticipated revenue, it has been significantly growing for the last four years from sh15.3b in 2015/2016, sh73b in 2016/2017, sh91b in 2017/2018 to a projected sh117b for the 2019/2020 financial year.

Akol said part of the new interventions necessary to widen the tax base include the Government bringing on board the informal sector, which now accounts for 51% of Uganda's economy.