Government is aiming at collecting 15 trillion Shillings with over 14.6 trillion, or 97.3% coming from taxes.
Only about 380 billion Shillings is expected from non-tax sources, so as to finance the 29-trillion-shilling 2017/2018 financial year budget.
The projected revenue to be collected is equivalent to 15.2% of Gross Domestic Product (GDP) against 14.42% of GDP in the financial year 2016/2017. The remaining 14 trillion Shillings is to be raised through internal and external borrowing.
Finance minister Matia Kasaija on Thursday afternoon presented the budget under the theme ‘Industrialization for Job Creation and Shared Prosperity’.
According to Kasaija, government has earmarked to invest in tax administration measures so as to improve the capacity of Uganda Revenue Authority (URA) capacity to implement the current tax laws, and enforce taxpayer compliance.
The presented budget scraps a number of taxes but still imposes new ones so as to raise revenue. Some of the new taxes are imposed on fire arms, soft drinks, beer, wine, wheat grain and spirits.
Kasaija’s budget imposes a 15 percent withholding tax on winnings in gaming and gambling. The minister has also increased the excise duty on soft cap cigarette from 45,000 Shillings to 55,000 Shillings per 1,000 sticks for locally produced cigarettes.
Withholding tax on imported cigarettes has also increased from 45,000 Shillings to 75,000 Shillings while the 10 percent import duty which had been removed in the 2016/2017 financial year budget has been reinstated on crude palm oil.
Meanwhile Value Added Tax (VAT) on different items has been scrapped. Savings and Credit Co-operatives have been exempted from paying income tax for a period of 10 years and VAT on animal feeds has also been scrapped in order to boost livestock farming.
VAT on locally manufactured furniture has also been scrapped while Bujagali Hydropower project has been exempted from paying taxes in order to deal with high power tariffs.
Kasaija further expounds on the issue of taxes under the Income Tax Amendment bill 2017.
Out of the presented 29-trillion-shiling budget, 7.6 trillion will go towards recurrent expenditure, 11.4 trillion for development expenditure while 9.9 trillion is for statutory expenditure.
The new budget is up by three trillion shillings from the 26 trillion shillings presented in the current2016/2017 financial year.
The largest proportion of the resources in the coming financial year goes to works and transport sector taking 4.8 trillion Shillings followed by Education at 2.4 trillion. Energy and Mineral Development takes 2.3 trillion with Health and Security taking 1.8 trillion and 1.4 trillion Shillings respectively.
Agriculture have been allocated 863 billion Shillings while Water and Environment takes 595 billion Shillings. Tourism, Trade and Industry has been allocated 98.3 billion while Information, Communication and Technology sector gets 106.4 billion Shillings.
In the Agriculture budget, the National Agricultural Advisory Services (NAADs) is allocated 310.2 billion shillings which is mainly going to the Operation Wealth Creation.
According to the budget, Debt repayment takes 9.9 trillion Shillings which is 35% of the total national budget. This amount towards debt has been increasing over the years with 7.7 trillion earmarked in the current 2016/2017 F/Y while 6.5 trillion was allocated in 2015/2016 financial year.
Key Project Allocations
According to finance minister Matia Kasaija, Uganda Development Bank (UDB) is to be capitalized with another 50 billion Shillings to avail low interest credit to the Uganda Business Community including those engaged in commercial agriculture. This new allocation now brings the total to 150 billion Shillings so far sunk into UDB. Government’s targeted investment in the bank is 500 billion Shillings.
The minister also noted an allocation of 23 billion Shillings to construct valley dams across the country while 4.4 billion Shillings has been availed for a cotton processing plant in Pader district.
Also availed is a 39-billion-shilling allocation to facilitate operations of extension workers to enable them reach farmers and guide them on best farming practices.
The 2017/2018 financial year budget focuses on intensifying transport infrastructure development to lower production costs as well as completing oil-related infrastructure development to enable commercialization and the first oil output in 2020.
The budget also focuses on increasing agricultural production and productivity for food security and strategic exports. It also focuses on enhancing private sector development for export promotion and import substitution.