By Patriot corps
In a concerning trend, the Uganda Revenue Authority (URA) has faced yet another setback in tax collections, marking the third consecutive month of shortfall. The latest figures reveal a staggering deficit of Shs. 148.12 billion in domestic revenue collections for February 2024, further exacerbating economic anxieties.
According to Uganda’s Performance of the Economy report for February, released in late March, domestic revenue collections fell short of the targeted Shs. 2,250.65 billion, totaling only Shs. 2,102.53 billion. Both tax and non-tax revenues failed to meet their respective targets, with tax revenue collections missing the mark by Shs. 75.38 billion.
The report attributed the underperformance to various factors, including taxes on international trade and indirect domestic taxes, which clocked in at 90.8% and 90.0% of their targets, respectively. Particularly, Value Added Tax (VAT) on imports suffered a significant shortfall of Shs. 44.56 billion, attributed to unrealized import volumes.
While direct domestic taxes exceeded expectations by Shs. 69.76 billion, buoyed by robust performances in PAYE, corporate tax, withholding tax, and taxes on interest earnings, the overall picture remains grim. URA’s contribution of 47% to the national budget highlights the critical role tax revenues play in sustaining Uganda’s fiscal health.
However, amidst mounting debt burdens and persistent reliance on external budget support, concerns over economic stability loom large. The State of the Economy report by the Bank of Uganda, released in December 2023, underscored the strain imposed by debt obligations, with a significant portion of tax revenues allocated to servicing debts.
For every 100 shillings collected in tax revenues, a staggering 32 shillings are diverted towards debt servicing, leaving dwindling resources for essential service delivery and development initiatives. This unsustainable trajectory raises urgent questions about Uganda’s fiscal resilience and underscores the imperative for proactive measures to bolster revenue mobilization and alleviate dependence on external support.