Kagina (right) with members of the Judiciary. Will they save her?

By David Mugabe

THE Ministry of finance has asked Uganda Revenue Authority (URA) to raise its performance in order to generate extra revenue and finance the country’s growing expenditure.

Uganda’s tax and non tax revenue to gross domestic product (GDP) ratio is one of the lowest in sub-Saharan Africa at just 12% since 2006. The sub-Saharan African average is 18%.

“When we reached 12%, we plateaued, our efforts of collecting revenue have remained stagnated,” said Lawrence Kizza, director of economic affairs at the ministry of finance while speaking to members of the Judiciary.

URA early this week convened members of the Judiciary to a two day workshop at the Lake Victoria Serena Hotel to try and narrow the knowledge and information gap sharing with departments that handle tax-related cases.

According to Allen Kagina, URA commissioner general, the tax body is targeting to raise the tax to GDP ratio to 13% this financial year. Kenya’s tax to GDP ratio is about 20% while Tanzania’s is at 16%.

There are currently 69 tax-related cases before the courts of law with a total value of sh114.9b.
This money is all tied up and cannot be collected by URA unless the cases are disposed of. It is also not guaranteed that URA will win the cases and thus have the money collected.

“The challenge we have with finance is we are not aware that there is a risk of injunction so we make our projections and put it into the budget,” said Kizza.

There were 35 cases in the 2007/2008 financial year worth sh14.5b. The figure has since risen to 53 cases worth sh56.8b in 2008/2009.

“Because of the (slow) process of disposal of cases, tax revenue is held up. Some cases have been in court for over two years,” said Kagina.

The low tax to GDP ratio illustrates the amount of money received from taxes compared to all the other economic activities in the country and yet taxes remain the main source of revenue for government’s planned expenditure. What this means is that government is quite constrained in terms of the level of involvement in the economy.

The acting Chief Justice, Mukasa Kikonyogo said tax legislation is one of the most evolving and specialised branches of the law.

She urged the bench to find time to share and learn the emerging principles and the old ones as well.

“Much as tax planning/avoidance is acceptable, tax evasion is not,” said Kikonyogo, quoting a precedence ruling.