SEATINI Uganda, ARiD and Other Partners Hold a National Dialogue on DRM

Domestic Revenue Mobilisation (DRM) is the cornerstone for sustainable development in any country. In Uganda, significant progress has been made toward mobilising domestic revenue through taxation.

SEATINI Uganda in partnership with the Advocates for Research in Development (ARiD) organized a National Dialogue on Domestic Revenue Mobilization and Accountability. The dialogue was held on the 24th of August 2022. The aim of convening the national dialogue was to strategize on how to enhance effectiveness and efficiency in Domestic and Local Revenue Management in Uganda.

Despite the various successes registered in enacting policies, and laws and putting in place systems for revenue mobilization, there are still several challenges faced by the Government of Uganda in mobilizing adequate revenue to finance its development priorities. As a result, Uganda’s current Tax to GDP ratio still stands at 13%. In addition, Local Governments (LGs) in Uganda are faced with financing challenges, and the majority finance less than 3 percent of their budgets through locally raised revenue thus remaining dependent on the Central Government transfer that amounts to almost 97% of their budget. This has continue to deprive the LGs of their mandate to provide services to their people.

Mr Job Akuni, the Executive Director of ARiD Africa in his welcome remarks noted that the dialogue has been organised to build on the proposals earlier developed in a position paper developed on Domestic Revenue Mobilisation. This paper was developed earlier this year following a two-day meeting in Gulu city with local government leaders.

Hon Kakooza James, a Member of the East African Legislative Assembly (EALA) noted that there needs to be a tax policy for the short, medium and long term. “In the developed world, tax laws are reviewed every five years but in Uganda, we do this every year, he further noted. He also encouraged the use of data when developing tax policies. “Instead of taxing a sector because it seems to be doing well, find out what their profit margins are like exactly. Otherwise, they can be taxed out of business,” he explained.

In his submission, Mr Martin Okumu an independent researcher noted that the fact that we have a narrow tax base is not new. He, therefore, urged Uganda Revenue Authority (URA) to look at the economy comprehensively as they want to expand the tax base. “One of the areas is agriculture, people are making a lot of money from trading in cattle selling but are not taxed at all,” he explained.

Hon Musasizi Henry, the Minister of State for Finance Planning and Economic Development, who was the chief guest at the dialogue noted that the government has introduced the Electronic Fiscal Receipting and Invoicing System (EFRIS) to collect taxes from many businesses that were operating informally. “This is better than the previous presumptive measures used when taxing informal businesses,” he added.

Hon Musasizi also noted that the government is reviewing many of the tax exemptions with a view of terminating many of them which are not benefitting the country.
“We need to deal with climate change impacts and reconsider the 6% tax on agricultural inputs,” Hon. Winne Byanyima advised. She noted that the changing climate patterns require that the sector reduce the reliance on rainwater for agriculture therefore the need for irrigation inputs.

Ms Regina Navuga, the Coordinator for Financing for Development Programme at SEATINI Uganda noted that there is inadequate time to thoroughly collect views from Civil Society, ordinary citizens and other stakeholders. “We should stop the rushed process, stakeholders should have adequate time to review, discuss and present to the government,” she further reiterated. She also thanked ARiD Africa for the representation they give to SEATINI Uganda and the Tax Justice Alliance Uganda in Northern Uganda where they are not present full-time.

In his closing remarks, Hon Kakooza James reiterated the need for government to restore the confidence of the taxpayer. “If you collect Five Hundred Shillings at the market, remove the garbage from the market,” he explained.