Cost of doing business still high
FACED with tough decisions on the back of an energy crisis and only sh3,847b available to support economic and social development, finance minister Dr. Ezra Suruma’s budget presentation has been applauded amidst concerns over the costs of conducting business and public administration.
By Kelvin Kizito
FACED with tough decisions on the back of an energy crisis and only sh3,847b available to support economic and social development, finance minister Dr. Ezra Suruma’s budget presentation has been applauded amidst concerns over the costs of conducting business and public administration.
The urgent need to provide a short-term solution to the energy crisis, Suruma said, is reflected in the widening of the fiscal deficit to 9.2% in 2006/07 up from 8.6% last year.
Although interest payments and domestic arrears repayment are expected to hit sh408b next year, critics said the Budget should have focused on reducing costs of doing business and conformed to regional tax reforms.
The telecommunications sub-sector, for instance, are vexed because their tax regime, although left unchanged, is the highest in the region.
MTN’s chairman Charles Mbire said he understands and appreciates the Government’s need to widen the tax base, but finds it disturbing that despite being one of the poorest countries in the world, Uganda still has the second highest telecommunications tax regime after Turkey.
“We hope the Government takes steps to harmonise the telecommunications tax rates in line with other East African countries. A high tax regime hampers business velocity, which reduces the fasttracking of accelerated growth required to transform Uganda from a less developed economy to a developed economy,†he said.
The most salient concern is the energy crisis. Suruma said the current shortfall in electricity supply at peak periods is about 200MW, making the development of immediate energy- generating sources to alleviate the gap a priority in the 2006/07 fiscal year.
He said sh70b had been allocated to thermal generation in addition to the deferral of loan repayments to Government from the electricity generation, transmission and distribution companies amounting to sh33b per year. This will contribute towards subsidising the cost of thermal energy generation.
These measures are commendable, but would have been supported by putting in place funds for campaigns to educate people about unnecessary lighting.
Experts say reducing daytime lighting alone in public premises could save Uganda between 40MW and 60MW, which is about the capacity of a single thermal plant.
Although Suruma underlined the gravity of the energy crisis, he was reluctant to mention that government subsidies for electricity consumption would be reduced gradually due to Budget constraints.
Consequently, the electricity tariffs will be hiked in phases over the coming six months.
FACED with tough decisions on the back of an energy crisis and only sh3,847b available to support economic and social development, finance minister Dr. Ezra Suruma’s budget presentation has been applauded amidst concerns over the costs of conducting business and public administration.
The urgent need to provide a short-term solution to the energy crisis, Suruma said, is reflected in the widening of the fiscal deficit to 9.2% in 2006/07 up from 8.6% last year.
Although interest payments and domestic arrears repayment are expected to hit sh408b next year, critics said the Budget should have focused on reducing costs of doing business and conformed to regional tax reforms.
The telecommunications sub-sector, for instance, are vexed because their tax regime, although left unchanged, is the highest in the region.
MTN’s chairman Charles Mbire said he understands and appreciates the Government’s need to widen the tax base, but finds it disturbing that despite being one of the poorest countries in the world, Uganda still has the second highest telecommunications tax regime after Turkey.
“We hope the Government takes steps to harmonise the telecommunications tax rates in line with other East African countries. A high tax regime hampers business velocity, which reduces the fasttracking of accelerated growth required to transform Uganda from a less developed economy to a developed economy,†he said.
The most salient concern is the energy crisis. Suruma said the current shortfall in electricity supply at peak periods is about 200MW, making the development of immediate energy- generating sources to alleviate the gap a priority in the 2006/07 fiscal year.
He said sh70b had been allocated to thermal generation in addition to the deferral of loan repayments to Government from the electricity generation, transmission and distribution companies amounting to sh33b per year. This will contribute towards subsidising the cost of thermal energy generation.
These measures are commendable, but would have been supported by putting in place funds for campaigns to educate people about unnecessary lighting.
Experts say reducing daytime lighting alone in public premises could save Uganda between 40MW and 60MW, which is about the capacity of a single thermal plant.
Although Suruma underlined the gravity of the energy crisis, he was reluctant to mention that government subsidies for electricity consumption would be reduced gradually due to Budget constraints.
Consequently, the electricity tariffs will be hiked in phases over the coming six months.