Uganda has been forced to go for commercial and development bank loans worth Ush2.4 trillion ($664.7 million) to finance the public security sector and cover shortfalls in revenue collection.
The loan request is before parliament pending approval.
Half the amount will be borrowed from Stanbic Bank and the rest from the Trade and Development Bank.
The Uganda Revenue Authority registered a shortfall of Ush603.7 billion ($162 million) in the first quarter of the 2019/2020 financial year. And by the end of the financial year URA is expecting a total revenue shortfall of Ush1.9 trillion ($510.2 million).
By October the URA was supposed to have collected Ush6.1 trillion ($1.6 billion) but the target was missed due to “delays in implementation of some administrative measures planned when the financial year was starting,” according to Secretary to the Treasury Keith Muhakanizi.
One of the administrative measures, and which is being contested by the private sector, is the installation of digital tax stamp system to stop tax evasion.
“URA has not consulted the private sector on where to install the digital stamp ma-chines. Yet if the digital machines interface and affect insured machines in the factory, the government isn’t willing to take on the cost,” said the executive director of the Private Sector Foundation Gideon Badagawa. “No insurance company will accept to compensate a manufacturer whose machines are affected by URA’s new technological measures inside factories.”
He added: “We are not against the digital tax stamp system. We just want to make sure that it doesn’t increase the cost of doing business in Uganda. The country’s tax problems stem from lack of efficiency and low tax compliance levels and not necessarily the lack of technological investments.”