Government taxes took yet another hit in November as the tax body, Uganda Revenue Authority (URA) collected less than the target at the time when there is decry over consistent poor tax performance.
A ministry of Finance November 2019 report on the performance of the economy shows that all major tax heads registered shortfalls. For domestic taxes, URA collected Shs 1.42 trillion in November against the target of 1.6 trillion. This translates into a shortfall of Shs 196bn for the month.
Pay as you earn (PAYE), which is paid by employed people fell – an indicator that either employers postponed their payments to a later date or reduced on the workers they employ.
Withholding tax, one that is deducted at source, also fell meaning that companies didn’t trade with each other vibrantly to allow such deductions. On the international taxes side, the report says that imports of goods targeting Christmas festivities were less than anticipated in November hitting government taxes hard.
It is during this time that government expects traders to bring more merchandise like clothes, shoes and others to be sold during the Christmas season. These came in at a slow rate. As a result, the government registered a shortfall of Shs 49 billion in that area with both import duty and Value Added Tax (VAT) on imports falling short by 12.8% and 11.9% respectively.
The November report continues a streak of poor performance of taxes on the government taxes since the start of the current financial year. The low tax collections rhyme with the slowdown of the economic activities across the country, according to Bank of Uganda.
This month, secretary to the Treasury Keith Muhakanizi said for the four months between July and October, government registered a tax shortfall of Shs 605bn. This meant that it had to look for where to get this money if it is to fund the Shs 40.5 trillion budget for the 2019/20 financial year.
Government says it will borrow Shs 2.4 trillion from Stanbic bank and Development Trade bank to cover the shortfall. URA is expected to collect at least Shs 20 trillion by end of June 2020.
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