Uganda Revenue Authority (URA) has requested Parliament for an extra UGX 169 billion to cater for the payment of wages of the newly recruited staff, despite the tax body failing to utilize all its wage bills for two consecutive years.
This followed a revelation by Henry Musasizi, Minister of State for Finance, that for the coming 2024/25 financial year, URA is expected to suffer a budget cut of UGX 55.73 billion due to the failure to utilise its wages for two years in a row.
“The budget for URA for 2024/25 is UGX 564.26 billion which is slightly lower than the current 2023/24 resource envelope of UGX 619.99 billion. This is because URA suffered a budget cut of UGX 55.73 billion on unutilised wages. There is a wage which wasn’t utilized for the last two financial years and the system has picked it as one of the candidates to be utilized for other purposes, said Musasizi.
Documents tabled before Parliament indicate that in 2024/25, URA’s approved budget is to the tune of UGX 564.26 billion of which, UGX 197.77 billion is for wage, UGX 321.17 billion is for non-wage expenses and only UGX 45.32 billion is for development expenditure.
This means that if the request for extra UGX 169 billion is approved by Parliament, URA’s wage bill will shoot to UGX 366.770 billion.
John Musinguzi, Commissioner General, URA who pleaded with the Committee on Finance to reinstate the reduced wages also made the case for more funds to cover salaries of the newly recruited staff. He said that all challenges that led to the underutilisation of the wage bill in the last two financial years had been sorted out.
“Our prayer is that this cut is reinstated because if it is maintained, the gap that will be created will not cover the current staff on the payroll. The cut was bigger than the gap, so we prayed for reinstatement of this cut. There were delays in the recruitment process to cover the gap, but they have been sorted out, and by the close of this financial year, the existing structure will have been filled. And as you can see, we are asking for additional support to cover the other areas and bring efficiency on board, said Musinguzi.
Musinguzi also defended the need for additional wages, arguing that the Authority recently did a structural review with the focus of improving the footprint of tax collectors in the areas that URA isn’t geographically and also cover sectors where the tax body isn’t collecting efficiently in order to improve the function of risk management and strategy.
“We are also setting up a small unit to monitor the tax expenditures and improve the supervision in that area. So, out of the proposed numbers for structural review, our prayer is that in the next financial year, the entire structural review requires UGX 169 billion, but our prayer is to do 60 per cent in the first year and then 40 per cent in the following year so that in two years, we are able to implement the recommended and approved new structure that will improve efficiency and tax collection, said Musinguzi.
MPs react
Agnes Apea, Woman MP Amolatar District, supported the request to reinstate the wage bill cut so that URA is able to carry out its mandate with new tax measures about to be passed by Parliament.
“If you really want more milk, I think we should be giving more pastures. But this is an entity that the whole country is dependent on, and we still go ahead and cut wages, at least if we were cutting something else, but not human resources that should be the one to help us enhance efficiency and collect for us more money, she said.
Napak District Woman MP Faith Nakut also weighed in, saying that it is important for the Government to consider the welfare of the staff, whose task is to collect taxes to run the budget.
High expectations
Minister Musasizi also told the Committee that URA is expected to collect taxes worth UGX 31.574 trillion to finance the 2024/25 national budget, which is an increase of UGX 1.9 trillion from the current target of UGX 29.672 trillion in the current FY 2023/24.
“To achieve this projected target, URA will continue to undertake the following reforms: roll out and enforcement of electronic receipting and invoicing solutions. The objective of this reform is to ensure that taxpayers are able to keep clear records, file returns in a timely manner, and they are able to efficiently assess their VAT. I call upon every Ugandan to support this cause, said Minister Musasizi.
However, some MPs expressed scepticism about the revenue collection target set for URA, with many citing figures from Ministry of Finance that indicated that by the end of February 2023, the net revenue collections were UGX 17.48 trillion against the target of UGX 18.5 trillion hence a shortfall of approximately UGX 1.1 trillion.
In URA’s updated figures, the Commissioner General revealed that as of 31st March 2024, the Authority collected domestic taxes to the tune of UGX 12.886 trillion against a target of UGX 19 trillion. Meanwhile, the international trade taxes collected amounted to only UGX 7.051 trillion against the target of UGX 10.669 trillion. This, according to URA, brought the total revenue collections by February 2024 to UGX 19.937 trillion against the target of 29.672 trillion.
“What is new and what is really magical that you are going to do to raise the expectation of this country that you are going to raise an additional UGX 1.9 trillion? I think that will put us at risk. We are better off maintaining the revenue that we generated last year because, after all, we have never seen a year in which we achieved a surplus of 2 per cent. I have a problem of over-exaggerating our projections, and for me, that is where the problem comes from, remarked Apea.
The Deputy Chairperson of the Committee on Finance, Jane Avur, asked the URA officials to explain what plans they have in place to ensure the revenue target is hit by the end of the financial year in June.
“Whereas our annual target revenue collection is about UGX 29.6 trillion, up to the first half of the year and later on in the Commissioner General’s report up to the end of the year, we are still at UGX 19 trillion. We would like to know as a Committee what corrective measures you have come up with for us to hit the target by June 2024. Because a lot of activities have been planned by different sectors and a lot of commitments have been made by the Government based on that target, said Pacuto.
Musizinguzi highlighted the performance of URA in 2023/24 revealing that there were 882,286 new registered taxpayers which saw the Authority close 2023 with 3,500,294 taxpayers.
What is needed?
URA needs additional UGX 284.22 billion of which; UGX 31.5 billion is for development of the oil and gas monitoring system.
“As you know this is a new system and the current activities of this sector are being captured manually and as you know, the amounts involved are significant so we request to have a system that will help us monitor all the transactions, investments in this sector starting 2024/25 with the development phase and then we complete this in 2025/26, explained Musinguzi.
The tax body is also seeking UGX 30.11 billion to establish a Tax Academy, while UGX 28.30 billion is needed for the disaster recovery cyber security infrastructure, and UGX 14.16 billion would be spent on replacing obsolete computers.
