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Budget committee tasks finance officials on wastage

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The Ministry of Finance appearing before Parliament’s Budget Committee.

Kampala, Uganda | THE INDEPENDENT | Members of Parliament sitting on the Budget Committee have asked government to consider non-taxed areas and those with revenue leakages, as part of its sources of income.

According to the MPs, these areas would bridge the budgetary gaps that have kept several key priorities unfunded for years.

The committee is currently scrutinizing the national budget framework paper for financial year 2024/2025. On Wednesday, the MPs interfaced with officials from the Ministry of Finance, Planning, and Economic Development.

Patrick Isiagi, the Budget Committee Chairperson asked government to recoup the revenue collections from Entebbe express road toll, which they said Uganda Revenue Authority (URA) has failed to collect.

According to the MPs, the express highway makes at least 3 billion Shillings per month but only 7 billion Shillings annual revenue has been declared to the committee.

“For the express highway, billions of money have been collected but URA has failed to account for that money, yet the law requires all revenue should be remitted,” said the Tororo County North MP, Geoffrey Ekanya.

He added that there are leakages in revenue collections in gaming and lottery and the mining sector which he asked the Ministry of Finance to look out for.

“These and several others can raise revenue to the tune of 4 trillion Shillings that can finance services that are not budgeted for,” Ekanya noted.

He further asked the Ministry officials to watch over procurements, such as those on government vehicles, saying the wastage therein if controlled could significantly support the budget.

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The committee also emphasized the need to tax gold saying it is the leading foreign exchange earner whose tax exemption they did not support.

“Before we passed the Mining and Mineral Act 2022, URA indicated that it was able to collect only 3 billion Shillings out of the 45 billion Shillings tax arrears from gold miners. we are saying this is the highest foreign exchange earner and we are getting no revenue to government, who owns these gold refineries?” Otuke County MP, Paul Omara asked.

Omara also asked the Ministry to recover all taxes that were not paid by Bujagali Energy Ltd, amounting to US Dollars 63 million during the first five years of development of the project, and US Dollars 342 million for overpaid fees subject as per the forensic audit by the Auditor General. These figures are entailed in a 2023 report by an ad-hoc committee’s inquiry into Bujagali operations.

Also, the MPs did not spare what they described as unprofitable operations of Uganda Airlines that government plans to finance for 20 years. They asked the Finance Ministry officials to scrutinize the operations of the airlines and cure what West Budama North East MP, Fox Odoi Oywelowo termed as a sacrilege.

“Ever since Uganda Airlines started flying to Dubai, Johannesburg, Lagos, and Mogadishu, it has never departed or arrived in time. Every late departure or arrival costs US Dollars 5000. To expect the taxpayer to carry this burden for 20 years is an act of malice against our people, it is a sacrilege,” Odoi said.

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He noted that by the expiry of the 20 years, the airline will need new aircraft which will require government to reinvest in a venture that he said is so far unprofitable.

The committee recommended that with such recoveries, government should finance critical areas such as the operationalization of the 10 new cities, the ongoing externally funded projects lacking government contribution, the tourism roads, and the upgrade of Akii-Bua Stadium as the country plans to host the African Cup of Nations games in 2027.

“On 1st July 2022, the creation of 10 new cities was effected, each city is asking for 1 billion to build headquarters and cover other administrative needs to operate, I think this should be a priority in the next budget,” said Berdege-Layibi Division MP, Martin Ojara Mapenduzi.

In response, Henry Musasizi, the State Minister for Finance-General Duties talked of government’s plan to expand development financing options.

“Government is taking steps to leverage additional financing from innovative resources. We are in the process of implementation of the Public Investment Financing Strategy which should ensure debt sustainability,” said Musasizi.

Musasizi told the committee about the three-year digital strategy launched by URA that will automate the tax processes and therefore reduce revenue leakages.

“In the financial year 2024/2025 identification and tracking status of service offerings across the URA value chains will be implemented.  Integration of URA payment platforms, Bank of Uganda payment platforms, and local government systems will be implemented,” he said.

Musasizi also clarified on the conflicting figures on the public debt and domestic arrears provided by different government entities saying that, according to the Ministry’s internal audit, the public debt stands at 86.3 trillion Shillings.

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He noted that the 96 trillion Shillings from the Office of the Auditor General could have probably been due to inclusion of domestic arrears which stand at 2.7 trillion.

The Budget Committee is scheduled to present to Parliament a report on the 2024/2025 National Budget Framework Paper on Thursday 25th January, 2024.

The national resource envelope is projected at 52.7 trillion Shillings.

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