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New Taxes Will Make Ugandans Poorer; NGO

Development Initiative (DI), a Non-Government International Development Organization has added its voice to the rest of Ugandans and urged the government to scrap off the mobile money tax which it says will negatively affect most Ugandans.

Moses Owori, a Senior Analyst at DI while making a presentation on whether the 2018/2019 national budget that was recently passed is pro-poor, said that the new proposed taxes like the tax on mobile money transactions and an increase in fuel tax will affect the poor Ugandans most and continue to push them further into economic constraints.

“Poor people rely on mobile money transactions as they are largely excluded from mainstream financial institutions. A tax on fuel will further drive basic commodity prices up as it indirectly or directly feed into transaction costs,” Owori said.

In this financial years’ budget that became effective 1st July 2018, the government imposed a 1% tax on most mobile money transactions that caused chaos to the general public.

The new taxes on fuel have also seen transportation prices  hike on all major routes in Kampala and upcountry. This had in the end impacted on all prices of goods and services.

Owori while commenting on how government spending decisions are likely to impact on the poor people noted that government’s decision to continue spending largely on infrastructure developments and the high spending on loan services might also slow down service delivery that directly benefit the poor.

According to the 2018/2019 budget figures, only 43.5% of the national budget is available for service delivery, the remainder goes towards debt payments, domestic financing, budget and project support.

“There is need to ensure sufficient funding especially to social sectors like education, agriculture, social development, health, works and transport in order to have more inclusive development,” Owori said.

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However, Margaret Kakande, Head of Budget Monitoring and Accountability Unit at Ministry of Finance said the problem is not how much money is spent on sectors but how effective it is being used.

“The problem is not lack of funds but the attitude of Ugandans towards corruption and service delivery effectiveness. Karamoja has been receiving the funds and yet have the poorest results. Ugandans must wake up and be alert in demanding for accountability from social service providers. A lot of the money that is allocated doesn’t do what it is supposed to do,” Kakande said.

She noted that the budget was pro-poor as funds have been allocated to relevant programs that are aimed at inducing poverty eradication especially in ruler areas.

Kakande also showed disappointment at Ugandans who say government is borrowing a lot and yet they do not want to pay taxes to finance the services they continue demanding.

“What exactly do you want government to do, when they borrow, people complain, when it imposes taxes so that we are able to finance the budget, people still complain and yet they want roads, hospitals and schools,” she said.

Emmanuel Kisaame, a Research Associate at ACODE- Uganda advised government to reconcile long term developments and immediate needs of the country so that it doesn’t suffer at the expense of the others.

“Uganda’s problem is prioritization, although we have limited resources, if there is good planning, these resources will be enough and there will be no need for excessive borrowing which is sinking the nation,” he said.

This is the fourth year that DI is holding such engagements that are aimed at providing policy makers with data evidence to influence their decisions on public spending.  DI mainly focuses on use of data to drive poverty eradication and sustainable development.

 

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