The ban on sachet waragi has been fronted by the Ministry of Finance, Planning and Economic Development as one of the reasons why revenue collection targets for the first quarter of Financial Year 2019/20 were not achieved.
Also blamed were the high taxes on beers.
According to the Permanent Secretary Ministry of Finance, Keith Muhakanizi, the overall net revenue target for F/Y2019/20 is Shs20.4 trillion. However, this might not be attained due to shortfalls realised in the first three months of F/Y2019/20.
Muhakanizi said the Shs20.4 trillion is broken-down into Tax Revenue of Shs18.9trillion and Non-Tax Revenue (NTR) Shs1.6trilion.
However, the overall collection for the period July to October 2019 amounted to Shs5.4trillion missing a target of Shs6.1trillion, registering a deficit of Shs603.69 billion (10 per cent below target).
“Income taxes collection was Shs1.5trillion against the target of Shs1.6 trillion leading to a deficit of Shs78.17bn, Rental Income Tax was Shs32.38bn and corporate Income Tax 32.67bn,” he said.
He, however, attributed all the above shortfalls to Pay As You Earn (PAYE) which registered a deficit of Shs40.81bn lower than expected collections from the Public Sector by Shs40.33bn. The surplus of Shs29.30bn on With Holding Tax (WHT) on the Treasury Bills (TBs) also attributed to the increase in the interest rate on the TBs.
The other deficit of Shs32.38bn in rental income tax was brought by the delay in awarding a contract to companies pledged to collect this tax such as RippleNamic.
“We also have a shortfall of Shs262bn in VAT and excise duties since they collected Shs1.3trillion yet the target was 1.6trillion but was brought by the deficit of Shs22.96bn on the excise duty on spirits occasioned by Government’s policy to ban sachet and minimum limit of packaging to 200ml. This made spirits more expensive especially for value consumers hence negatively impacting the volumes of sales,” he said.
He added that production of beer reduced by 6.49 million litres leading to a reduction in sales by 4.51million litres in the first four months of FY2019/20 compared to the same period in the last year.
“There was also a deficit of Shs20.52billion on the excise duty of mobile money transaction and a deficit of 5.79bn on duty value of mobile money charges this is due to drop in the number of mobile transaction,” he added.
Meanwhile concerning the budgetary allocation, Muhakanizi said a total of Shs5 trillion has been released for Quarter Two expenditure where wages got Shs 1.18 trillion, Uganda Revenue Authority (URA) Shs436 bn, Local Government Shs309bn, (including Education capitation Grants and Development grants.)
National Medical Stores got Shs131bn for essential medicines and drugs, Road Fund Shs109bn for road maintenance and additional Shs33bn for salary enhancement for teachers.
The whole national approved budget of FY2019/20 is Shs40.49 trillion – Shs4.67trillion is for wages, Shs7 trillion for non-wages, Shs7.8trillion for GoU development, Shs9.4trillion for External development, Shs10.6trillion for Debt and Treasury Operation, Shs 449.53bn Domestic Arrears, Shs397.01bn for Local Revenue and AIA.
According to Muhakanizi the release of Quarter two represents 55.9 per cent of the whole budget.
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