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Uganda Tax consultants speak out on budget

Wednesday June 15, 2011

PRIVATE sector and donor group leaders have cautioned that allocations to major projects like the multibillion Karuma project will test government discipline in attracting future external funding.

“If the Government can demonstrate that it can implement this project really well, it can attract more funders,” Thomas Richardson, the IMF senior resident representative, said.

Richardson said it is important to invest in infrastructure, but even more important to invest well.

“The projects have to be really implemented and delivered on time; if you are able to do this, you get more investors,” said Richardson.

To close the funding gap and expand the tax base, Richardson reiterated his view at PriceWaterhouseCoopers (PWC) post-budget session that there was need to examine whether incentives were offering value-for-money.

“You have to examine whether you are getting benefits from the tax exemptions,” said Richardson.

He pointed out the national identification system that the Government is pioneering as one of the ways of expanding the tax base. The identity process will ensure that data about every Ugandan is centralised, a key starting point for developing and aggregating data on taxpayers.

Patrick Bitature, the private sector
representative, called for the need for diligent planning as opposed to quick gratification. He urged professionals and the technical people to play their part in containing the rampant corruption.

“These guys cannot pull off a million dollars on their own; they need a very good lawyer and a banker,” said Bitature.

The Government collects sh600b in duty from petroleum products, which is about 15% of total tax revenue.

On budgetary initiatives to ease borrowing by small earners, Francis Kamulegeya, the PWC partner said the exemption of stamp duty on securities should be raised from sh2m to sh5m because a single borrower may take several loans in a short period to avoid the stamp duty.

“Why restrict it to only sh2m. It should be raised to sh5m in sync with the youth entrepreneurship venture capital fund,” said Kamulegeya.

He hailed the scrapping of taxes on solar energy as a policy to encourage supply of solar power to consumers in rural areas, thereby promoting clean and alternative energy.

Lawrence Kizza from the ministry of finance said tax is a function of how sophisticated the economy is and whether the tax laws compel people to pay taxes.

He said the structure of Ugandans’ living complicates issues but this is bound to improve.

“Another complaint is that we are not taxing people in the informal sector; it is difficult for us to reach them. The bulk of Ugandans live in rural areas, consume their own food, buy mattresses once a year,” said Kizza.

By David Mugabe: The New Vision Newspaper

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