Political interference affecting tax collection – URA official

KAMPALA.

Failure of the government to put tax revenue into good use that benefits the society is the major challenge affecting tax collection in the country, a senior official has said.

According to Mr Evaristto Mugisha, the Uganda Revenue Authority (URA) official attached to Domestic Taxes Department, tax collection is affected by government’s challenge of striking a strategic balance between desire for tax revenue and appeasement of certain factions of society to gain political popularity.

“The sentiments expressed by politicians have at times been contrary to tax legislations implemented by URA and the obvious is jeopardising tax yields and putting the professional independence of the authority under suspicion,” he said.

Impact of crises
While presenting a paper at a public dialogue in Kampala last Friday on the challenges of tax collection in Uganda, Mr Mugisha explained that tax collection is a victim of numerous economic and political crises the country has gone through.

“Ugandan market is largely an importing economy and over time has witnessed a lot of political strife which hampers economic growth, killed and displaced some people within Uganda and regionally. These are not conducive avenues for commerce and trade thus affecting tax collection,” he added.

Frontier for Accountability, Transparency and Integrity (FATI) organised the dialogue under the theme ‘Revisiting Uganda’s taxation policy, its management and impact’.

In the 2015/16 financial year, URA failed to hit their revenue target with a shortfall of more than Shs400 billion.
The tax company collected approximately Shs11.231 trillion against its Shs11.63 trillion target.

Mr Mugisha said that people have maintained a negative attitude towards tax which has resulted from tax evasion activities.
“URA is facing an uphill task of combating this culture to replace it with cultivating a culture of voluntary compliance. Tax enforcement mechanisms are expensive and eventually increase the cost of tax administration generally which is uncalled for,” Mr Mugisha said.

Participation of all
According to Mr Mugisha, whether in support of the ruling regime or not, revenue collection in any country should be a concern by every right thinking national because public revenue is the backbone of every society’s economic progress.

“True, there are many challenges that hinder tax collection initiatives but with support from everybody through paying each person’s fair share of tax contribution, the tax burden is lessened,” he said, appealing to the public to embrace the culture of voluntary compliance in honouring tax obligations.

Impaired systems
FATI legal director, Ms Peace Mbabazi, observed the channels through which government is accountable are dysfunctional which demoralises tax payment in the country.

“The systems through which a local person can engage government are limited. We do not have avenues to have tax issues addressed yet we would like to see an all-inclusive government to attract people to pay taxes,” she said.

ekasozi@ug.nationmedia.com