Budget was well received
Jun 13, 2011
ONE of the key highlights of many a nation each year is Budget Day. That is why Wednesday, June 8, was eagerly awaited, as new finance minister Maria Kiwanuka started her tenure in the toughest way possible— presenting the national budget for financial year 2011/12.
Mary Karooro Okurut
ONE of the key highlights of many a nation each year is Budget Day. That is why Wednesday, June 8, was eagerly awaited, as new finance minister Maria Kiwanuka started her tenure in the toughest way possible— presenting the national budget for financial year 2011/12.
The first post-election budget is never an easy one. The reason is that the budget immediately following an election is always expected to be a blend of reward and reassurance; rewarding the people for their confidence in the newly-elected government and reassuring them that they have cause for confidence for the next five years.
This means that the budget ought to reflect some of the key promises made by the new government to the people. The citizens, therefore, watch it closely to see if their new government will follow through on the programmes it promised to put in place, or (in rare cases for developing countries) the taxes it promised to cut.
Such a budget also sets the mood for the next five years, by spelling out which the priority areas will be. Question and concern then is whether the budget priority areas mirror the priorities of the people; the felt needs of the society.
This new budget under the theme “Promoting Economic Growth, Job Creation and Improving Service Delivery†seems to be positive and well thought-out, and shows this government’s continued determination to strategically prioritise those core programmes which form the main foundation for the transformation of our economy on a sound and sustainable basis.
First, the country registered a good report on the priority areas of the previous financial year: Infrastructure development in roads and energy, promotion of science, technology and innovation for value addition, private sector development and employment creation, enhancing agricultural production and productivity, and human development. The promises made last year were fulfilled to a great extent.
Secondly, there is an improvement in the resource envelope. Whereas the total resources available for the budget amounted to just over sh8.3trillion during the financial year 2010/11, the resource envelope for the next financial year amounts to over sh9.8trillion, almost sh10trillion.
And compared to 68% local funding in last year’s budget, we have 71% local funding for this year’s budget; which signals decreasing donor dependency and corresponding self-sufficiency.
Compare this to a decade and a half ago when more than 50% of our budget was donor-funded and you will agree that this country is most certainly growing just fine. Donor dependency inevitably imposes a severe limit on state sovereignty.
That is why even though legally, all states in the United Nations are equal, that legal sovereignty has not been matched by what is termed ‘behavioural sovereignty’ – the ability of a nation to exercise its sovereignty both internally and internationally because it, inter alia, lacks ability to provide for its citizens, meaning that its internal dynamics are largely dictated by external actors.
For the very first time in our country’s history, we are taking a problem-specific approach towards sorting out employment challenges, with sh44.5b to be invested in creating jobs in the next financial year. This will be through a Youth Entrepreneurship Venture Capital Fund to support the youth starting or expanding their business enterprises.
The beauty of this is that unlike previous loan schemes, this one will feature not just capital input, but also a heavy emphasis on entrepreneurial training under the hand of Enterprise Uganda to instil business management skills among the youth, enable them join the job market or create their own enterprises and impart technical skills to youth, using non-formal vocational training programmes.
Under human resource development, free education has been extended to A’level and business, technical, vocational and education training beginning in January 2012. In real life terms this means it is possible for one to study free of charge and begin paying fees only when they reach university, or study free beyond A’level, and onwards into vocational education. This is a huge leap forward for this country, because national development is always premised on human resource development.
For good measure, this budget also gives hope in some areas of critical concern which are being considered by Government, but whose foundation is still being laid.
One of these is the proposed student loan scheme for university education which is under study and will be implemented in the near future.
As pointed out above, tax cuts are rare in developing countries which are burdened with a narrow revenue base. But this monkey has been taken off our back in this budget, with some timely and well-calculated tax cuts, which should help reduce the cost of living and also in some part, stimulate economic activity.
For instance, to provide relief to households from the burden of increased kerosene prices, the excise duty on kerosene, which has for some time been at sh2,000 per litre has been scrapped. That should cut down kerosene prices heavily. The reduction of excise duty on sugar by 50% is a good response to the recent rise in the price of essential commodities, and this should ensure that sugar remains available on the family table.
To augment local production and encourage food security, import taxes on hoes were remitted from 10 percent to 0 percent, which means that the small peasant farmers need not fear for availability of farm equipment.
The exemption of the supply of solar energy from value added tax (VAT) shall encourage supply of solar power to consumers in rural areas while the removal of VAT on ambulances will help stem an everyday crisis in this country: difficulty of transporting patients to hospitals.
This is therefore without doubt one of the best budget Uganda has had in a long time; short on tax increments, but generous on tax cuts.
ONE of the key highlights of many a nation each year is Budget Day. That is why Wednesday, June 8, was eagerly awaited, as new finance minister Maria Kiwanuka started her tenure in the toughest way possible— presenting the national budget for financial year 2011/12.
The first post-election budget is never an easy one. The reason is that the budget immediately following an election is always expected to be a blend of reward and reassurance; rewarding the people for their confidence in the newly-elected government and reassuring them that they have cause for confidence for the next five years.
This means that the budget ought to reflect some of the key promises made by the new government to the people. The citizens, therefore, watch it closely to see if their new government will follow through on the programmes it promised to put in place, or (in rare cases for developing countries) the taxes it promised to cut.
Such a budget also sets the mood for the next five years, by spelling out which the priority areas will be. Question and concern then is whether the budget priority areas mirror the priorities of the people; the felt needs of the society.
This new budget under the theme “Promoting Economic Growth, Job Creation and Improving Service Delivery†seems to be positive and well thought-out, and shows this government’s continued determination to strategically prioritise those core programmes which form the main foundation for the transformation of our economy on a sound and sustainable basis.
First, the country registered a good report on the priority areas of the previous financial year: Infrastructure development in roads and energy, promotion of science, technology and innovation for value addition, private sector development and employment creation, enhancing agricultural production and productivity, and human development. The promises made last year were fulfilled to a great extent.
Secondly, there is an improvement in the resource envelope. Whereas the total resources available for the budget amounted to just over sh8.3trillion during the financial year 2010/11, the resource envelope for the next financial year amounts to over sh9.8trillion, almost sh10trillion.
And compared to 68% local funding in last year’s budget, we have 71% local funding for this year’s budget; which signals decreasing donor dependency and corresponding self-sufficiency.
Compare this to a decade and a half ago when more than 50% of our budget was donor-funded and you will agree that this country is most certainly growing just fine. Donor dependency inevitably imposes a severe limit on state sovereignty.
That is why even though legally, all states in the United Nations are equal, that legal sovereignty has not been matched by what is termed ‘behavioural sovereignty’ – the ability of a nation to exercise its sovereignty both internally and internationally because it, inter alia, lacks ability to provide for its citizens, meaning that its internal dynamics are largely dictated by external actors.
For the very first time in our country’s history, we are taking a problem-specific approach towards sorting out employment challenges, with sh44.5b to be invested in creating jobs in the next financial year. This will be through a Youth Entrepreneurship Venture Capital Fund to support the youth starting or expanding their business enterprises.
The beauty of this is that unlike previous loan schemes, this one will feature not just capital input, but also a heavy emphasis on entrepreneurial training under the hand of Enterprise Uganda to instil business management skills among the youth, enable them join the job market or create their own enterprises and impart technical skills to youth, using non-formal vocational training programmes.
Under human resource development, free education has been extended to A’level and business, technical, vocational and education training beginning in January 2012. In real life terms this means it is possible for one to study free of charge and begin paying fees only when they reach university, or study free beyond A’level, and onwards into vocational education. This is a huge leap forward for this country, because national development is always premised on human resource development.
For good measure, this budget also gives hope in some areas of critical concern which are being considered by Government, but whose foundation is still being laid.
One of these is the proposed student loan scheme for university education which is under study and will be implemented in the near future.
As pointed out above, tax cuts are rare in developing countries which are burdened with a narrow revenue base. But this monkey has been taken off our back in this budget, with some timely and well-calculated tax cuts, which should help reduce the cost of living and also in some part, stimulate economic activity.
For instance, to provide relief to households from the burden of increased kerosene prices, the excise duty on kerosene, which has for some time been at sh2,000 per litre has been scrapped. That should cut down kerosene prices heavily. The reduction of excise duty on sugar by 50% is a good response to the recent rise in the price of essential commodities, and this should ensure that sugar remains available on the family table.
To augment local production and encourage food security, import taxes on hoes were remitted from 10 percent to 0 percent, which means that the small peasant farmers need not fear for availability of farm equipment.
The exemption of the supply of solar energy from value added tax (VAT) shall encourage supply of solar power to consumers in rural areas while the removal of VAT on ambulances will help stem an everyday crisis in this country: difficulty of transporting patients to hospitals.
This is therefore without doubt one of the best budget Uganda has had in a long time; short on tax increments, but generous on tax cuts.