Tax Cuts And Subsidies Are Bad For The Economy – PSST

Tax Cuts And Subsidies Are Bad For The Economy – PSST

By Our Reporter

Ramathan Ngoobi; the Permanent Secretary and Secretary to the Treasury in the ministry of finance, planning and economic development has said that the call by the public for government to introduce subsidies and tax cuts on essential commodities are bad for the economy.

He made these remarks on Monday at that post budget engagement organized by the Ministry of finance and Uganda Revenue Authority at Hotel Africana in Kampala.

“If we told the petrol stations to sell at a certain price, the petrol stations will just either sell their fuel outside Uganda to other markets which don’t control them or hide the fuel. When I cut the tax say on fuel, you will demand more. But this fuel is expensive because there is less fuel in the international supply chain,” he said.

He said that such measures will run the country’s treasury dry , and will bring the economy to its knees. He cited the situation in countries within the EAC who did so, and realize that it doesn’t work and they made a u-turn.

Ngoobi said that the only way to nip the situation in the bud is through fiscal and monetary policies like reducing government expenditure that will reduce the money supply in the economy. “You don’t fight inflation by fuelling it with more money. So those of you who are asking us to give you more money to spend, it will not happen,” he stated.

URA has been given the task to collect Ugx25.6t in the next financial year of which Ugx23.8t is tax and Ugx1.8 non-tax revenue which is the highest amount ever allocated. Ugx5t will be borrowed domestically bringing the total figure to Ugx30.79t.  Externally Ugx9.3t will be borrowed to implement government projects especially infrastructure. The government has Ugx40.1t to spend in the next financial year, and the remaining will be used to service debts.

Ngoobi warned government MDAs on fiscal discipline and said that starting the next financial year, money will only be released for pro people expenditure only as he added: “This tendency of people coming that we want a supplementary to buy a car, it will not happen. I am buying a small machine in my ministry to destroy papers which have a request for supplementary for buying cars, wage shortfall”.

The Authority estimates that there are seven million people engaged in income generating activities, and there is need to bring them on the tax man’s database so that they contribute to revenue mobilization.

URA CG John Rujoki Musinguzi giving a keynote address on Monday at the Post Budget engagement in Kampla.

John Musinguzi, the URA Commissioner General while giving a keynote address said that the Authority is working towards tax efficiency and enhancing compliance among the tax payers through the use of technology.

The Authority has added 800,000 new tax payers on the list in the current financial year bringing the total number to 2.4 million tax payers out of seven million working population.

Musinguzi noted that the Authority has already collected a figure in excess of the Ugx24t that was allocated by Ministry of Finance FY21/22, and that they are on course to achieve the target in the next ten days. “It sounds very difficult but I will tell you how, and why I think we can achieve it especially if I get the support of our esteemed tax payers,” he said.

He encouraged all tax payers including government to accurately file their tax returns, and pay the right amount of tax in form of income tax. He concluded that the days of declaring deficits at the Authority are over because they are in an upward trend of collecting  enough revenue for the country

The Commissioner General further told journalists that the Authority will efficiently collect more revenue domestically through stakeholder engagement through use of technology, and sharing information with other countries to know people who are having offshore accounts and dodging paying tax in the country.

He further said that they will also tap into the digital space whereby the players can file their tax returns on a quarterly basis

John Walugembe the executive director of Federation of small medium sized enterprises (FSME) rallied its members to tap into the business opportunities in the budget like government procurement, the money put into human capital development. He lauded the government for not introducing new taxes that will go a long way into empowering SMEs to grow and contribute to revenue collection for the economy.

Related post

A beginner’s guide to forex trading

A beginner’s guide to forex trading

By WN Admin Foreign exchange trading-also commonly called forex trading or FX—is the global market for exchanging foreign currencies. Forex is…
Money matters: Bank of Uganda replaces Mutebile’s signature on banknotes

Money matters: Bank of Uganda replaces Mutebile’s signature on…

By Wod Omoro Kampala – The Bank of Uganda has finally replaced the Governor’s signature on the banknotes, after a year…
Sustainability standards, certification initiative (SSCI): Post Bank & Housing Finance Bank enlisted

Sustainability standards, certification initiative (SSCI): Post Bank & Housing…

By Wod Omoro Kampala – Post Bank and Housing Finance Bank on Friday were enlisted on the Sustainability Standards and Certification…

Leave a Reply

Your email address will not be published. Required fields are marked *