Uganda’s tax body on Friday said it had registered 46.6 percent of its targeted revenue collection in the first half of this financial year 2017/18, and is on course to achieve the annual target.
Doris Akol, Commissioner General of the Uganda Revenue Authority (URA), said that as 2017 closes, they have collected 7 trillion shillings (196 million U.S. dollars) out of the 15 trillion shillings they targeted to collect before the close of the financial year in June 2018.
The tax body is hopeful the trade and services sectors will yield more windfalls in the last half of the year, to enable it to increase collections.
According to the World Bank, Uganda’s economic outlook for the financial year 2017/18 is positive, with real GDP growth expected to reach 5 percent.
Akol said the prediction based on infrastructure investments, good weather and macroeconomic stability, gives hope to the taxman that the remaining 53 percent of the target can be surpassed.
“When the economy comes back up and we see growth, it translates into profitability for our clients and improved tax collections for us. This gives us hope that we shall close the year in a very healthy position,” she said.
She said although the collections were briefly affected by the election in neighboring Kenya, they (collections) have now bounced back and are expected to further stabilize in 2018.
Akol said the first half of the financial year, which ends this month, a number of sectors slowed down while others improved compared to the previous years.
She said manufacturing was one of the sectors that experienced a slowdown, with volumes of products coming off the production lines thinning, which affected excise duty and Value Added Tax collections.
She said the slowdown in manufacturing is a direct reflection of the reduction in aggregate demand, adding however, that 2018 is expected to yield better results.
“The other sectors that experienced a slowdown include the wholesale and retail, financial services, and telecoms sectors,” she said.
Vincent Seruma, the URA spokesperson, said the slowdown in the financial services sector is greatly affecting the performance of banks, and consequently revenue collection.
Bank of Uganda, the country’s central bank, has steadily lowered its Central Bank Rate from 17 percent in February 2016 to 10 percent as at the close of 2017.
This expansionary monetary policy stance was aimed at boosting economic growth in view of declining inflationary expectations.
As a result, average commercial bank lending rates also declined from 25.2 percent in February 2016 to 18 percent as at the close of 2017. However credit uptake has not yet picked to a desired level, according to Seruma.
He said telecoms have noticeably slowed down because of the change in the way people use telecom services, and the taxman is looking at it to study new policy mechanisms to boost the sector.
On a positive note, Akol said the real estate, transport, information, communication technology and construction sectors continue to do well, with trade making tremendous improvements compared to a few months ago.
“In the 2018 calendar year, we hope to roll out some more digitization initiatives such as the billing machines for tax stamping as well as for VAT declarations,” she said. Enditem