Africa-Press – Uganda. The Ministry of Finance officials yesterday presented details on sources of revenue for the Shs41.2 trillion Budget for the Financial Year 2021/2022.
In the next financial year, Finance minister Matia Kasaija wants to pick Shs200b from the Oil Fund/ Petroleum Fund to finance spending pressures.
The plan according to sources in the Finance ministry is to pick the money from the Petroleum Fund/ Oil Fund and take it to the government kitty where it will be shared according to the 2021/22 National Development Plan III priorities.
The Fund is a creation of section 56 of the Public Finance Management Act (PFMA), 2015. The Fund serves as a depository for all revenues accruing to government from petroleum and related activities.
However, this is not the first time government is picking money from the Oil Fund. Appearing before the Finance Committee in January last year, the State minister for Finance in charge of Planning, Mr David Bahati, said: “The Petroleum Fund isn’t empty, there is some money [Shs70b]. We follow the law and the laid down procedures. Parliament is always consulted before money is withdrawn from the Fund.”
The Auditor General and House Public Accounts Committee members have consistently raised queries about the expenditures in relation to the “depleted” Petroleum Fund. Under PFMA, Finance minister must seek prior parliamentary approval before he or she picks money from the Petroleum Fund.
Internally, the government planned to raise up to Shs25.1 trillion from domestic resources to fund part of its expenditure in the forthcoming budget. Part of this money will come from direct taxes, non-tax revenue (Shs1.5 trillion) domestic financing (Shs2.3 trillion), the Petroleum Fund (Shs200b) and Appropriation in Aid/local revenue (Shs215.5b).
New tax measures
The Deputy Secretary to the Treasury, Mr Patrick Ocailap, yesterday revealed that Shs20.8 trillion out of the Shs25.1 trillion slated to be generated internally from domestic resources, will come from taxes projected to be collected by the Uganda Revenue Authority (URA).
The government has since tabled a raft of proposed taxes in Parliament, seeking approval before they are confirmed as part of the revenue for the FY2021/2022 Budget.
Mr Kasaija early this month tabled on the floor of Parliament seven new taxes including the annual direct tax of Shs200,000 on all motorists, 12 per cent tax on data to replace over-the-top (OTT) tax, 30 per cent or 250 tax on locally made alcohol, Shs70,000 on fish maw, and 30 per cent tax on all rental houses among others.
Mr Ocailap, who presented the revenue sources before the House Finance Committee, read out the planned government revenue sources and expenditure projections for the next financial year.
He told lawmakers that an additional Shs7.5 trillion will come from external resources such as loans and grants.The government also intends to raise another Shs8.5 trillion for domestic debt re-financing.
Governments use debt re-financing to take advantage of new financing that offers more favorable terms [interest rate] or lending conditions. In such a situation, the Ministry of Finance would settle their current debt outstanding through issuing new debt with more favorable terms or conditions.
External budget support
From the external sources, Mr Ocailap disclosed that they project Shs7.5 trillion will come of which Shs6.1 trillion from loans and Shs1.4 trillion from grants for both Budget support and project support.
Mr Kasaija told Daily Monitor after the committee meeting that the government wants to reduce the borrowing element as a source of Budget financing in the next financial year.
“This coming financial year, there will be little borrowing and even that little borrowing will highly be concessional. There are so many people coming here to lend us money but we have turned them down,” Mr Kasaija said.
In the mid of growing opposition to the proposed tax measures, the minister told the media that the government is hopeful that Uganda Revenue Authority and the Finance ministry will be able to raise the projected funds from domestic financing because the economy is recovering from the shocks.
Mr Kasaija asked MPs to approve the proposed taxes to enable government raise the needed money to finance the Budget. The National Unity Platform party leaders have since asked MPs to block the proposed taxes and demanded accountability of the taxes collected from the 2020/2021 measures.
Motorcycle base
URA annually clears more than 90,000 motorcycles into the country. For instance, in the 2018/2019 Financial Year, URA cleared 91,055 motorcycles before the figure went to 99,020 units in the 2019/20 Financial Year. However, current trends indicate the figure will grow further at the end of this financial year, giving government an opportunity to increase revenue projections.
