John Rujoki Musinguzi, the Commissioner-General of the Uganda Revenue Authority (URA) has commended financial institutions for their continuous deliberate efforts geared towards the extension of their services aimed at supporting proper and effective revenue collections.
Musinguzi who was speaking during the 6th URA Annual Banks’ Conference, at Mestil Hotel in Kampala on Friday said that these financial institutions are ley players in the government’s domestic revenue mobilization efforts by acting as a link between URA and taxpayers and also supporting business growth in the community.
This, he said is because of their strategic contribution to facilitating businesses through financial literacy, banking services, and payment platforms that enable taxpayers to honor their tax obligation thus playing a vital component in the economic development. He noted that 94% of taxes are collected through banks which have eased URA’s work.
“The role of financial institutions in this strategy cannot be underestimated. We require a collective effort and commitment from all of us in improving service delivery, client support, supporting business developments, industrialization, and economic growth as well as paying a fair share of tax revenue to support government programs, reduce the level of economic dependence and improve the overall social welfare in our country,”
“Being a vital link and an extension of URA services, the financial institutions have also gained power to win over more taxpayers towards the path of tax compliance through their experience the institutions’ services,”
According to Musinguzi, while the economies world over had gone through major social and economic disruptions it was eminent to find ways of supporting and helping businesses stay afloat in addition to mobilizing revenue internally for national development without relying on external aid.
“The role of these financial institutions, therefore, provided further leverage to the partnership in improving government revenue collection for the realization of the Domestic Revenue Mobilization agenda objectives that looks at improving revenue collection and increasing the tax to- GDP ratio to 18% by the financial year 2023/2024,” he said He said that domestic revenue currently funds 47% of the national budget which force the government to borrow the remaining 53%.”The Tax-to-GDP ratio also lies at 13%, which places Uganda at the lowest and below the average sub-Saharan African performance of 16% which could only be reversed if only the Tax- to- GDP ratio is at least doubled to 26% according to research,”
This conference was driven under the theme, ‘the role of financial institutions in Domestic Revenue Mobilization Strategy’, with the aim of discussing the contribution of financial institutions and the private sector towards improving government revenue collection while also giving insights on opportunities for improvements to be made and also focus on improving tax compliance in the informal sector. Speaking at the same function, Moses Kaggwa, AG. Director Economic Affairs Ministry of Finance, Planning and Economic Development, who represented Ramathan Ggoobi, the ministry’s permanent secretary said that domestic revenue mobilization heavily depended on the level of development in the financial sector because the sector heavily supports Government’s effort in collecting revenue.
The total amount of tax revenues from the banking sector accrues to over Shs958 Billion.
