Will govt widen net for more taxpayers?

Pedestrians walk past Maria’s Galeria along Dastur Street in Kampala. People want to see that everyone pays their fair share of taxes. PHOTO BY MICHAEL KAKUMIRIZI 

In Summary

• The success of theDomestic Revenue Mobilisation Strategy (DRM) launched recently, with a view to widen tax compliance, is dependent on how government implements it. Prosper Magazine’s Ismail Musa Ladu interviewed Ms Jane Seruwagi Nalunga, an expert on trade, tax and investment related issues and the executive director of SEATINI-Uganda, on the relevance of the three-year DRM that will be implemented by the Finance Ministry. Excerpts below.

By Ismail Musa Ladu

Is the Domestic Revenue Mobilization (DRM) Strategy the solution to Uganda’s tax mobilisation challenges?
That will depend on how it will be implemented. When we started talking about tax justice, people were not aware about tax accountability. There was laxity in demanding for accountability. We anticipate that with strategy in place, the country will have a clear direction on how to mobilise resources in a fair and inclusive way.

The strategy provides some certainty and predictability. If you look at the principles underpinning the strategy, it is encompassed with simplicity, transparency, fairness and involvement of tax payers in the tax formulation processes. There is some effort to reduce revenue leakages and exemptions.

This is in addition to promoting the social contract as well as stamping out corruption. The strategy seems to provide commitments to address all these challenges. However, as the saying goes: “The proof of the pudding is in the eating.”

Is the DRM strategy complete in its current form?
Any good strategy must provide concise objectives, thorough analysis of the problem and actionable interventions. The DRM strategy seems to include all these. Importantly, strategies should also depict some assumptions and risks.

But this DRM does not have them. The two elements are important in terms of the future. It appears as if this strategy has no budget attached to it and that is somewhat strange.

Do you think the DRM strategy speaks to the aspiration of the tax payers?
Yes it does; people want to see that everyone pays their fair share of taxes and if the strategy is implemented, it is possible that people may endear to it. There is every chance for that to happen if properly implemented.

So there is need to engage the population to realise value for money. This will strengthen the social contract between the government and citizens.

Is DRM strategy a quick fix or document with solutions to the tax structure?
I don’t think so. It makes attempt to address both policy and structural issues. We believe the DRM strategy analyses the challenges Uganda is facing in mobilising taxes. It is a sobering reflection of the reality on the situation.

The document does not shy away from raising challenges such as corruption and misuse of resources. It also outlines clearly the necessary actions that are required to reach the desired goal of developing a robust but fair taxation system. However, it is just a document which will have to be translated into action.

Is the DRM strategy a product of consultative process?
The process of developing the DRMS involved representatives from the private sector and the Civil Society Organisations (CSOs) under the Tax Justice Alliance Uganda. We consulted some stakeholders to inform the process.

Some of the CSOs recommendations on double taxation agreements, tax incentives and exemptions, local revenue mobilisation, and citizen’s engagement in tax policy were considered. Others including impact of mobile money and social media tax were not taken on board yet the impact is already evident. However, citizens’ engagement in tax issues is still limited.

Government will have to involve more citizens in the tax policy formulation process. Most people are not aware about the processes. Fortunately, one of the key interventions in the Strategy is tax payer education and communication.

Are you optimistic about this document? If yes, why? If no, kindly explain.
Yes I am optimistic. Strategies guide you where you want to go and how to get there. Government has been trying to mobilise resources; however, it has been facing a number of challenges as envisaged in the low tax to GDP [Gross Domestic Product] ratio which has recently been re-based to 12.9 per cent.

This will need concerted efforts of all stakeholders. We need money to implement all the strategies and ensure that the aspirations to mobilise our resources do not stop on paper only.

Do you have faith that this strategy will be implemented to its logical conclusion?
I hope so; for that I will give it benefit of doubt. I am keeping my fingers crossed to see how it all turns out. As a country we are not short of good laws and strategies. Our problem seems to be deeply entrenched in implementation. It is up to us to demand that government implements what it has committed to.