URA looms in deficit ahead of the closure of the financial year

URA looms in deficit ahead of the closure of the financial year

Uganda Revenue Authority (URA) is expected to close the financial year with a deficit for the second time in as many years.

With just less than two months to the close of the financial year of 2020/21, the tax collecting body must collect at least Shs6 trillion to suffice the income inadequacy. 

Ms Julie Njuba, the URA assistant commissioner business policy while speaking on the economy discourse said the tax agency was behind it’s revenue collection by about Shs6 trillion.

“We need Shs6 trillion to meet our target. This is because by end of April we had only collected about Shs15.6 trillion yet our target for this financial year is Shs21.6 trillion. So, as we speak we are below target and we only left with about two months to go,” she noted. 

Ms Njuba nonetheless said, URA had instituted numerous measures which included among them Electronic Fiscal Receipting and Invoicing Solution to broaden the tax base. 

This imminent failure to meet the objective will be the second time URA is reporting a shortfall. 

Last year saw URA close the financial year with an income deficit of Shs3.5 trillion, which was partly blamed on the Covid-19 pandemic that ravaged economies globally. 

Dr Fred Muhumuza, the Makerere University School of Economics lecturer, said that while tax performance is braced by a flourishing economy, it was presently hard to collect sufficient taxes given a cut back in economic activities. 

“All key sectors of the economy that could have triggered growth, are either recovering from the effects of Covid-19 or largely slowed down.” the professor said.

In the 2020/21 financial year, URA had targeted to collect Shs21.81 trillion, of which Shs20.219 trillion would be tax revenue while Shs1.591 trillion was non-tax revenue. 

Therefore the Shs6 trillion deficit signals that the body has so far collected Shs15.81 trillion just two months prior to the winding up of the financial year.   

The government in June is awaited to reveal the 2nd budget under the third phase of National Development Plan, estimated to be Shs44.7 trillion where domestic revenue will contribute  Shs21.6 (47.5 per cent). 

 There has however been some concern on  the satisfactoriness  of funds for the execution of NDP III and achievement of the country’s development goals. 

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However, experts said that for government to achieve imcome collection objectives, it must rejuvenate economic activities by availing assistance to pivotal sectors of the economy as well as giving stimulus packages to sections of the economy that were hit by Covid-19.  

Government revealed how a stimulus of Shs1 trillion has already partly been implemented to increase growth over the medium term. However, there is worry that such stimuluses have not been applied well a thing that spells doom for the already struggling economy.

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