Govt misses target in February 2023 tax revenue collections

KAMPALA-Government in February 2023 collected Shs 1,765.69 billion tax revenue against a target of about Shs 1,794.70bln, according to the latest Performance of the Economy Monthly Report released by the Finance ministry.

“This followed lower-than-targeted collections under indirect taxes and taxes on international trade which more than offset the surplus collection registered under direct taxes,” says the report.

According to the report, direct tax collections amounted to Shs 562.19bln against the target of Shs 480.23bln. This performance was on account of surplus collections for PAYE [Shs 68.53bln], corporate tax [Shs 3.79bln], withholding tax [Shs 9.07bln], tax on bank interest [Shs 5.68 billion], and rental income tax [Shs 1.46bln].

The higher than anticipated collections in PAYE were due to the increase in salaries for some civil servants and increase in employment in the private sector mainly in the oil and gas sector, says the report.

On the other hand, the report says indirect taxes amounted to Shs 442.87bln against the Shs 513.37bln target for the month as both the excise duty and Value Added Tax [VAT] were below their respective targets. “This is mainly due to lower than the projected level of economic activity and thus demand for items like beer, sugar, cement, cosmetics, cooking oil…”

Similarly, taxes on international trade transactions were also lower than the target of Shs 796.27bln by Shs 39.48bln, with the shortfall mainly being driven by lower collections in import duty, excise duty, and VAT on imports as the volume of imports turned out lower than anticipated during the month.

Expenditure

Despite collecting less-than-the-anticipated tax revenue, government in February 2023 spend Shs 2,539.88bln, 1.3 percent higher than the plan of Shs 2,507.62bln for the month. “This performance was mainly on account of recurrent spending and domestically financed development expenditure both of which were higher than their respective targets for the month,” the report says.

Expenditure on recurrent items amounted to Shs 1,647.68bln against a target of shs 1,518.31bln, with the main driver being non-wage recurrent expenditure.

Government spending on nonwage recurrent items was Shs 888.67bln, 10 percent higher than the plan. This was due to some expenditure planned for January 2023 being executed in February 2023.

Development expenditure in February 2023 amounted to Shs 888.67bln performing at 98.3 percent against the target of Shs 900.83bln.

https://thecooperator.news/minister-kasolo-challenges-local-govts-on-tax-revenue/

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