Indirect taxation way to boost Uganda tax revenues
Kampala November 4-Indirect taxation may be the only way to boost Uganda’s tax revenues given the low compliance levels and a narrow tax base, speakers during the Uganda Revenue Authority’s (URA) engagement with parliament said this week.
Organised under the theme ‘Domestic Revenue Mobilisation – the pathway to economic stability and self-sufficiency’, the tax collector cited a number of challenges to meeting domestic revenue targets with lack of tax compliance emerging as a major obstacle. Legislators in attendance (the house is locked in a battle with the executive over exemption of their allowances from taxation), suggested that it was high time indirect taxation was considered to widen the loop and also skirt evasion.
“If URA is to revitalize, it should stop believing in direct taxes since the compliance levels have remained low given the large informal sector. But with indirect taxation one may want to avoid but may not dodge taxes because the taxes are included on every product or service one consumes,” Richard Othieno Okoth the MP for Tororo suggested.
“The direct tax base is outdated and developed countries have opted for indirect taxation and the performance of their tax revenue bodies is remarkable. Uganda should copy from them because with indirect taxation, people pay taxes indirectly,” he added.
Amos Lugolobi the Chairperson of the Budget Committee and also Ntenjuru MP says as the tax body seeks for ways of widening the tax base and improving tax compliance, government also needs to play a crucial role in all this by ensuring that the business environment is conducive for a country that is still lagging behind and struggling to achieve the tax to GDP ratio target of 16 percent compared to the sub-Saharan region average of 22 percent.
“We need to develop the Private sector if we want to increase our tax base, if we don’t improve our infrastructure like good roads, power for the private sector to conduct their business efficiently without any challenges then we cannot expect to grow the tax base,” Lugolobi argued.
Doris Akol, the URA’s Commissioner General agreed that government support of its efforts was the only route to acheiving a quantum leap in tax collections otherwise the efforts of the body would go to waste.