Draft National Tax Policy in the offing

KAMPALA, August 9, 2024  – The Finance ministry is nearing completion of a new National Tax Policy, which is anticipated to become public in December. This policy will outline comprehensive guidelines for the taxation of goods, services, and income, serving as a critical tool for revenue mobilization.

The update was provided by the State Minister for Finance [General Duties], Henry Musasizi, in response to concerns raised by the Leader of the Opposition in Parliament [LoP], Joel Ssenyonyi, during a plenary session chaired by Deputy Speaker Thomas Tayebwa on Thursday.

Ssenyonyi expressed concerns about what he described as over-taxation, which he claimed has impeded the aspirations of small business owners and working families across the country. He stressed the need for a well-structured tax framework to guide the imposition of taxes.

The Leader of the Opposition’s concerns, articulated by Chief Opposition Whip  John Baptist Nembeshe, were a reaction to President Museveni’s State-of-the-Nation Address delivered on June 6, 2024, at the Kololo Ceremonial Grounds. In addition to over-taxation, Ssenyonyi highlighted rising unemployment and the high cost of living. He also criticized the government’s handling of borrowed funds, noting that many loans remain unutilized or mismanaged.

In response, Musasizi explained that the government’s increased investment in oil and gas, as well as related infrastructure projects such as airports, oil roads, and dams, has elevated the country’s debt servicing obligations. He reported that Uganda’s nominal debt-to-GDP ratio stands at 46.91 percent, below the 52.4 percent threshold set by the Charter for Fiscal Responsibility.

“We have thoroughly reviewed the entire loan acquisition process to ensure that we only commit to projects that are ready for implementation. A comprehensive Public Investment Management Strategy framework has been developed to enhance the efficiency of public investments,” Musasizi stated.

Regarding high youth unemployment, the minister highlighted various government initiatives, including the Parish Development Model [PDM], Emyooga, and the Agriculture Credit Facility, which aim to support enterprises and households in both formal and informal economies.

“Since 2019, the Emyooga Programme has created over 314,548 employment opportunities, and in 2023 alone, enterprises funded by the Uganda Development Bank [UDB] generated 51,841 jobs,” Musasizi noted.

Musasizi also discussed the development of automated systems in key accountability areas through the Integrated Financial Management System and electronic Government Procurement as measures to combat corruption.

“Automation is a crucial tool in minimising corruption by reducing direct interactions between public officials and citizens, thereby decreasing opportunities for corrupt practices,” Musasizi explained.

He added that digitalisation efforts will also address issues like the shortage of medicines in hospitals by improving the connection between delivery, storage, diagnosis, prescription, and dispensing processes.

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