MPs pay rise disrupts budget

By Vision Reporter

Increased pay for Members of Parliament is one of the expenditures that disrupts the budget, finance minister Ezra Suruma will announce today when reading the national budget.

By Felix Osike and Peter Kaujju

Increased pay for Members of Parliament is one of the expenditures that disrupts the budget, finance minister Ezra Suruma will announce today when reading the national budget.

The 332 MPs, who are already highly paid, were recently given sh30m each for vehicles. Additionally, the Government has agreed to contribute 30% of their basic salaries of sh1.4m for pension. All allowances included, MPs pocket between sh6m and sh9m per month.

Other items that will put a strain on the budget are Graduated Tax compensation to the districts and the Commonwealth Heads of Government Meeting in November. Graduated Tax was scrapped in 2005.

The remarks are contained in the background to the 2007/2008 budget titled: “Re-orienting Government Expenditure towards Prosperity for All.”

According to the report, the total budget for the 2007/2008 period is projected at sh4,766b.

However, the government’s domestic arrears payments amount to sh280b, leaving only sh4,486b for spending by the Government.

Domestic Revenue is expected to be sh3,059b. The ministries expected to get a lot of funding are works and transport, education, agriculture and economics. The health sector funding will decline due to a reduction of donor project aid.

The report warns the government against destabilising the tax system by raising Pay as You Earn threshold. “Pressures to raise the PAYE threshold will result in a revenue loss of sh93b while pressures to provide additional tax incentives will also undermine tax revenue.”

President Yoweri Museveni had hinted that there would be tax incentives for the investors.

Critical areas in this year’s budget are the energy crisis, Universal Secondary Education, the northern Uganda reconstruction, the development and maintenance of transport infrastructure, rural development and science, technology and industrial development.

While the construction of Bujagali dam will alleviate the erratic power supply, thermal power generation will continue to be used to compensate for the energy shortfall, according to the report. Priorities for the 2007/08 budget include interventions to enhance economic growth and measures that will increase production, productivity and value-addition, including micro-finance.

Other priorities are measures to increase domestic and external competitiveness and public sector interventions to deal with constraints to accelerate the socio-economic transformation of Uganda.

The government also aims at reducing aid dependency. Currently 36% of the national budget is financed by the donors, though it is a significant reduction from previous years.

Meanwhile, speculation about the proposed abolition of license fees caused a shortfall in revenue collections for May 2007. URA had proposed to replace the license fee with a fuel levy, citing problems in collection and rampant forgery of the licenses.

“For the month of May 2007, the fees and licenses performed below forecast levels. A total of sh4.67b was collected against a target sh6.34b, which performance is largely explained by low compliance resulting from the proposed abolition of road license fees,” the report read.

The finance minister will announce the outcome of the URA proposal as he reads the budget today.

Like in previous years, Museveni will not attend the new budget presentation. He travelled to Germany yesterday morning for a working visit.

In 2003 and 2004, Vice-President Gilbert Bukenya presided over the ceremony.

MPs pay rise disrupts budget