Uganda Revenue Authority on Coarse to Hit Fiscal Revenue Target
With the end of the financial year just around the corner, Uganda Revenue Authority (URA) is on course to hit the total revenue collections and possibly surpass the target for the year.
This however, is not a sign that the economy has fully bounced back and will grow beyond the revised 5% annual growth rate.
The earlier on projected growth of 6.2% was revised to about 5% by the World Bank as a result of the shocks like high inflation rates, the unstable exchange rate as well as tightening of the monetary policy that have increased the cost of doing business.
The global outlook doesn't favour Uganda's economic challenges because the downside risks to the global economic growth persist as economic activity continues to weaken due to the escalating Euro area crisis, deteriorating bank-lending conditions across a number of developing countries as well as sharp declines in capital flows to emerging economies.
The global economic growth is projected to grow at 3.3% in 2012 compared to 3.8% of 2011.
Announcing the revenue performance for March in Kampala last week, Mr. Moses Kajubi, the Commissioner Domestic Taxes, URA said that the Central Bank's tight monetary policy has impacted on business.
"Tight monetary policy of the Central Bank is discouraging consumption and instead encouraging savings and investments," he said.
He mentioned this in regard to the 12% decline in the number of motor vehicles and motorcycles registered in the month of March 2012 as compared to March 2011.
The impressive revenue performance saw the Ugandan tax body collect Ush560.3b ($244m) against a set target Ush503.6b ($219m), posting a surplus of Ush56.7b ($25m). The surplus registered in March therefore helped reduce the cumulative shortfall from Ush71.6b ($31m) at the end of February 2012 to Ush14.9b ($6.5m).
According to Kajubi, the performance was spurred by among other factors intensified efforts on recovery of tax arrears and audit assessments, success rate in favour of URA for cases filed in the courts and most importantly the Ush72.8b ($32m) stamp duty on the farm down transaction between Tullow Oil, CNOOC (China National OffShore Oil Corporation) and Total.
However, lower than projected levels of fuel import volumes, where 103million litres were imported in March 2012 down from 123 million litres imported in March 2011, led to a shortfall of Ush18.6b ($8m) on petroleum duty.
Kajubi said, "This was purely a result of logistical problems at the Port of Mombasa and not as a result of contracted demand from the economy." The figures seem impressive bearing in mind that the country as most of the region, has suffered low production resulting from poor supply of electricity.
This led to dependency on generators and a high cost of goods and services leading to a high cost of products.
The shorfall may however, been offset by the accruing taxes on oil since many industries and business establishments resorted to thermal power to bridge the gap created by low hydro power. However, since March, loadshedding has reduced as more power is generated from the new Bujagali Falls Dam.
BY EMMA ONYANGO The East African Business Week 29 APRIL 2012