Sunday, June 16, 2013

Private Sector happy with budget as Finance Minister defends taxes ...

By Ronald Musoke

Representatives of the private sector that, according to Maria Kiwanuka, the finance minister, are Uganda?s new donors have given kudos to the 2013/2014 budget.

While meeting for their annual post-budget analysis at Kampala?s Protea Hotel, they said the budget was ?very well delivered? since most of the government?s aspirations met their own ambitions.

They praised the government for the deliberate plan of continuity with last year?s priorities.

The budget, they noted touched on the key concerns of the private sector such as; reining in inflation, stabilizing the exchange rate and building the export base.

In addition, the continued aggressive investment in infrastructure development, particularly in transport and energy was also commended by the sector.

However, they expressed frustration over the government?s inaction to improve the country?s railway and waterways. These two transport systems; the private sector says are crucial to lowering transport costs and bringing down the cost of doing business in the country.

Gideon Badagawa, the executive director of the Private Sector Foundation of Uganda, the conveners of the post-budget luncheon noted that this year, 76% of the proposals suggested by the private sector during the pre-budget consultations with the government were adopted, a drop of four percentage points to last year?s budget.

He said the government?s continued investment in infrastructure development (roads and energy); skills building and improving the tourism and agriculture sectors were all good signs of a government moving in the right direction.

Now, Badagawa said, since the government has found a solution by locally mobilizing resources, the challenge will now be governance and accountability.

?Donors have walked away from us?I wouldn?t want tax payers to run away from us,? he said.

Badagawa wants the government to build or improve the capacity of institutions that are meant to account for the resources.

However, he noted that the government?s new move to raise money by slapping excise duty on a range of goods and services means that Uganda?s tax system is inelastic.

He said although there are no quick fixes, there is need for the government to introduce new tax sources.

Continuing with the calls for more accountability of the locally generated resources Dr. Eve Kasirye-Alemu, the PFSU Vice Chairperson noted that the monitoring process will only work if stakeholders like the private sector who are the benefactors of this budget get involved.

Chris Kassami, the outgoing Permanent Secretary and Secretary to the treasury at the finance ministry commended the private sector for tremendously contributing to the resilience of the economy.

?The private sector has ably supported this year?s budget by up to 80%. I have no doubt that very soon, the sector will be able to support up to 100% of the [country?s] budget,? he said.

However Ben Asiimwe, the Chairman of the Uganda Informal Sector Transformation Organisation was not particularly happy with the new levies on mobile money and kerosene?levies which some sections of the Uganda public have labeled anti-poor.

For instance, as far as mobile money is concerned, he said, besides bringing them into the ??banking sector,? it had brought down the cost of doing business in their sector since it does not require so much [time and money] to transact across long distances.

He also thought the Shs 200 levy on Kerosene, ostensibly introduced by the government to check the adulteration of fuel was uncalled for and is most likely to drive some informal businesses out of business.

But Kiwanuka who at times sounded irritated noted that Ugandans should not be bogged by the new taxes.

Kiwanuka said the new taxes are just proposals. There is still room for engagement with the Parliament, the private sector and tax experts to review these taxes, she said.

She said Uganda?s economy had grown by 5.1% in the second half of the 2012/2013 financial year even on the back of constrained resources.

?Our problem is not lack of enough money but how well we use the money. Help us look after your money,? she said.

?Last year was a year of transparency. This year, help us to be a year of transparency and accountability.?

Even when there were [aid] cuts, the government still went ahead with infrastructure development, she said. Kiwanuka noted that the government will continue to focus more on infrastructure and rural electrification to make development more inclusive.

She was particularly unhappy with the way the media interpreted her budget, saying that the ?heavy tax budget headlines? were uncalled for because even if all the proposed taxes were to get passed, they would only raise only 3% of anticipated revenue.

?So what is the shouting about?? Kiwanuka asked.

She said Ugandans were forgetting that the re-introduced tax on kerosene was already in existence two years ago and that the same applied to the VAT on water.

Kiwanuka noted that the VAT on piped water will be used by the government to help the National Water and Sewerage Corporation (NW&SC) to roll out piped water to districts that are yet to get piped water, while the increase in motor cycle registration of up to Shs 200,000 from Shs 70,000 is proposed to go towards treatment of boda-boda accident victims at Mulago Hospital.

She added that the excise duty which has been proposed to be levied on petrol and diesel will fetch the government money for road maintenance.

Stephen Biraahwa Mukitale, the chairperson national economy and the MP for Buliisa concurred with the private sector, noting that, it is true the budget was responsive to the needs of the tax payers since the priorities in it are meant to bring down the cost of doing business while at the same time boosting Uganda?s competitiveness.

However, he too called upon the private sector and the rest of the Ugandans to demand for accountability for their money from the government.

?The one who pays the piper calls the tune, therefore you have every right to demand for accountability,? Mukitale said.

Source: http://www.independent.co.ug/ugandatalks/2013/06/private-sector-happy-with-budget-as-finance-minister-defends-taxes/

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