Uganda Revenue Authority is expected to collect Shs 15trillion shillings inform of taxes this financial year 2017/18, up from 13.1 trillion in the previous fiscal year.
However, according to economists, this is an ambitious target that won’t be met by the taxman following the current performance of the economy which is just recovering from last year’s storm.
At half year, URA has only managed to collect 116.9 billion shillings.
A number of initiatives have been put in place to close all loopholes that have been affecting the tax base but these haven’t been fruitful as URA struggles to hit the government set target of collecting 15 trillion this financial year.
While presenting study findings on Uganda tax base, Musa Mayanja a research analyst noted that Uganda’s revenue collection is highly affected by the large informal sector that isn’t registered and doesn’t pay taxes. 50 per cent of GDP according to UBOS is attributed to the informal sector, and 80 per cent of the labor force work in the informal economy.
“The informal sector is too big and their taxes are not tapped in yet they can help the country generate more taxes,” Mayanja said.
Ramathan Ggoobi an economist, noted the taxman will not be able to meet the government set target of 15 trillion in such a recovering economy. Currently according to him, URA has done its work to the extent of over taxing recovering businesses but it’s upon government to attract informal sectors to graduate to formal in order to widen the tax base.
Ggoobi says this financial year, government should reduce on its expenditure to allow the economy to recover.
“People in the informal sector don’t want to formalize because government has made it comfortable for them since no one looks for them to pay taxes,” Ggoobi said.
SOURCE: Nile Post