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Economic experts warn that it is too early to celebrate the performance
Kampala, Uganda | JULIUS BUSINGE | Uganda Revenue Authority has recorded a surplus in revenue collection for the first quarter of the Financial Year 2020/21 amidst the coronavirus pandemic but economic experts warn it is too early to celebrate.
The taxman collected Shs4trillion for the months of July to September against target of Shs 2.9trillion.
This comes seven months since the new Commissioner General, John R. Musinguzi took office from Doris Akol – who served for approximately five years.
Good revenue performance enhances government’s ability to deliver services to the population.
“As a tax administration, we recognize that this year has been particularly difficult due to the Covid-19 pandemic,” Musingunzi told journalists at the URA headquarters in Nakawa, Kampala on Oct.13. “We are doing all we can within our means to support businesses to remain afloat,” he added.
Uganda’s economy remains relatively subdued with GDP growth reported at -3.2% in the quarter to June 2020, from 1.7% recorded in the previous quarter owing to the nationwide lockdown, according to Uganda Bureau of Statistics (Ubos).
Economic growth in FY2020/21 is projected in the range of 3.0-4.0%, lower than earlier projections of above 6%.
Shs4tn revenue
During the first quarter of FY2020/21 (July to September), the net revenue collections were approx.Shs4tn against a target of Shs2.9tn, representing a Shs 1trillion surplus.
Musinguzi said revenue worth Shs64.8bn, representing a 1.6% growth was registered in July this year compared to July last year. He said the subsequent months of August and September recorded a 1.4% and 8.3% surge in revenue collection compared with the same months last year.
This was contrary to the months of April, May, and June and July 2020, in which revenue collections recorded a sharp decline.
But as Musinguzi was reporting a surplus, economic experts said it is still too early to celebrate.
Paul Lakuma, an economist and research fellow at the Economic Policy Research Centre at Makerere University told The Independent on Oct.15 that the performance is “a good story but we have a long way to go; we should work harder.”
Lakuma added that the performance was pulled off by the new leadership which should be commended.
URA is expected to collect around Shs19.7tn (revised) this financial year compared to last year’s target of Shs 20.3trillion.
General performance
The domestic taxes collection during the period stood at Shs2.5tn, performing at 131% and Shs590.75bn above the target.
On the other hand, international trade tax in the same period were Shs1.7tn, performing at 138% with a surplus of Shs479bn.
In terms of sector contribution, 76% of the revenue collected was from the top five sectors, with the wholesale and retail sector contributing 31%, and manufacturing sector contributing 23%.
About 9% of the revenue was collected from the information and communication sector, while the financial and insurance services contributed 7.7% to the revenue in the period.
Public administration sector contributed 5.6%. There was growth in revenue in some key sectors like manufacturing which grew by 18.54%, information and communication grew by 20.49%, while revenue from the wholesale sector grew by 2.30%.
However, significant declines in revenue were registered in some sectors. For instance, revenue from accommodation and food services declined by 58.8%, education sector declined by 31.9%, revenue from arts, entertainment and recreation declined by 55.6%, while a decline of 33.6% was registered under water supply. The decline is attributed to a slowdown in business in these sectors owing to COVID-19.
