Experts in the economic sector have proposed that government centralizes the task of domestic revenue collection to tax body Uganda Revenue Authority (URA) in order to increase efficiency and cut on costs.
They say that the approach to have government institutions mobilize their own resources and at the same time determine their expenditure as failed to produce the anticipated results.
On Thursday, URA held its annual Open Minds Forum to discuss ways of developing a medium term revenue strategy as a way of boosting domestic revenue which remains a barrier to economic growth.
Uganda’s tax to GDP ratio stands at 15.5%, the lowest in the East African region.
Dr. Joseph Muvawala, the Executive Director National Planning Authority (NPA) while speaking at the forum at Kampala Serena Hotel spoke to the need to revise the strategy of mobilizing taxes to meet the country’s ambitious development agenda.
“We have not done well with non-tax revenue, there are many leakages. The strategy going forward should be consolidating tax collection. We should move away from institutions collecting and using money to one institution (URA) collecting and handing over to the consolidated fund,” Muvawala proposed in his submissions.
He alluded to the time when URA started collecting revenue from passports which he said brought forth impressive results.
“We must have a way of dealing with tax expenditures. There has to be a criterion of giving tax expenditure and also have methods of monitoring and evaluation the benefits,” he added.
Similarly, development economist, Dr. Fred Muhumuza economist argued that too much money is being wasted in parallel tax collection which costs the tax payer time.
“Ugandans are paying too many taxes but also there are so many people collecting these moneys and this comes with costs of administering the collections. Let us consolidate the collection,” Muhumuza said.
He suggested that government adopts the model used by airlines where the tax payer is assessed and told their annual returns and URA is sole collector for KCCA or UTODA fees.
The issue of wasteful public expenditure dominated Thursday’s discussion with some criticizing political decisions such as the continued separation of districts and unnecessary tax incentives that in turn cripple economic growth.
Logan Wort, the Executive Secretary for the African Tax and Administration Forum (ATAF) revealed that Africa loses US$ 38.6 billion in revenue annually through wasteful tax incentives.
“We give these tax incentives because we think it brings investment but we found that tax incentives rate number 13 and 14 on the priority list of international businesses when they decide to invest in a country. If they [investors] are coming for oil, gold and coffee, they will still come because these things are here today. You don’t have to pay them,” Wort said.
Keith Muhakanizi, the Permanent Secretary in the Ministry of Finance who is also Secretary to the Treasury supported the proposal to consolidate tax collection saying “URA is doing a good job. Let us support what we have seen work.”