Government losing sh8 trillion in tax exemptions - Report

Kivumbi who was not amused by the majority report noted that the Government tax exemptions make no sense in light of budgeting constraints occasioned by pressures on the national resource envelope.

“We have almost sh8 trillion in tax exemptions; we have just highlighted a few; others are getting corporation tax holidays, which are taxes on profits…they come here, they get free electricity and land, and then they do not pay tax,” he said.

The shadow minister listed some entities against the proposed exemptions they are to get, which totaled to sh588b, a figure he said should be collected to finance the budget.

“If we can recover only sh4 trillion from the tax exemptions, we can balance our budget and implement it; it is about time we launched an inquiry into tax exemptions in Uganda,” Kivumbi told Parliament.

The Deputy Speaker of Parliament, Thomas Tayebwa, said since there is a committee established by Parliament to look into the tax exemptions for Bujagali Hydropower Project, the same committee can look into all exemptions.

“We have a committee to look into the tax exemptions of Bujagali; we should not go into the budget cycle without the report; if you have done a good job, we shall give you the other entities to also look at expeditiously in two weeks,” he said.

Go slow on ambitious budget

The majority committee report called for a go-slow on the nearly sh50 trillion projected budget for Financial Year 2023/24.

In its report on the National Budget Framework Paper presented, the committee deputy chairperson, Ignatius Wamakuyu Mudimi, said the resource envelope may not be sufficient to cover planned expenditures.

“It will be necessary to put planning and budgeting on a more fiscally realistic path due to the current global economic challenges,” said Wamakuyu.

Whereas the committee noted a projected sh1.8 trillion increase in domestic revenue mobilisation efforts, it worries that a big chunk of the budget will go to debt and statutory payments, further leaving near to nothing for actual development work.

Of the sh49.9 trillion that will be on the table for distribution, already 64.1 per cent of that is likely to be channelled to debt and recurrent expenditure, leaving only 35.9 per cent for development expenditure, which has the potential of positively impacting economic growth.

“The proposed resource prioritisation is very worrying and could indicate that our fiscal operations may not be sustainable in the long run as debt-related payments continue to take the lion’s share of the budget,” he said.

Wamakuyu said focus should be evenly put on both human capital development initiatives to improve quality of life

Even then, noted the committee, the biggest chunk of the development budget goes into infrastructure, which the committee said may not be very sustainable in alleviating rising poverty and unemployment.

The focus, said the committee deputy chairperson, should be evenly put on both human capital development initiatives to improve the quality of life.

“The committee recommends that there is need to strike a balance between and human capital development as well as re-engage development partners especially under the programme of human capital development; investments in social sectors especially health, education and social protection have a direct impact on poverty and income inequality,” he said.

Substantive debate on the matter is slated for Tuesday, 31 January 2023.