Gov’t policies could hurt economy – PSFU

Kampala, Uganda | THE INDEPENDENT | The Private Sector Foundation is concerned that the policies that the government is putting in place are likely to worsen the effects of the Covid 19 pandemic on the economic and social situations in the country.

The Private Sector Foundation Uganda Chairman, Elly Karuhanga says for example, the government is seeking to increase taxes and create more to cater for the gap left by the decline in other revenue sources especially from the sectors that were hit hard by the pandemic.

The affected revenue sources included tourism, international travel and international trade among others that saw businesses almost shut down and could therefore not pay taxes.

This is worsened by the fact that external sources like donors and lenders are also hard hit while others are restructuring their investments away from lending or giving grants to developing countries.

This has left the government with fewer options of raising money to fund its budgetary requirements. One of the options is to increase domestic revenue collections and this is likely to see Ugandans incur more taxes.

Karuhanga is concerned that the government is going to increase its domestic borrowing which is likely to see commercial banks stay away from lending to the private sector, preferring to lend to the less risky government.

He says that unfortunately, private sector companies are already affected and finding it hard to stay in business.

Karuhanga also attacked the government taxation policy and specifically dwelt on the implementation of the digital tax stamps at this time. The DTS is a machine-readable digital stamp put on the locally manufactured products and selected imports to ensure that they are genuine and taxes have been paid on them.

However, the manufacturers have been demanding that the government incurs the cost of the stamp to ensure that it does not increase the cost of the product, which is otherwise transferred to the consumer.

But Karuhanga also says the stamp has affected many people along the value chain including the producers of raw materials used in the production.

The accountants also blamed the way some companies have handled the pandemic, including what they call unplanned restricting of their activities in the hope that they would reduce the expenditure and stay in business.

Amos Bagumire, the Managing Director of ABS Consulting Group says some of the decisions being taken, including laying off employees are not good for the economy and the society.

Bagumire also noted that there is a growing trend of the management of organizations clashing with the boards of directors, both in government parastatals and private companies, and blames the board members of trying to understate the importance of managers.

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