Uganda loses $270,000 per day to smuggling – URA

According to the Uganda Revenue Authority (URA), government loses at least $270,000 (about Shs 985 million) per day to smuggling in unpaid taxes and some officials in the tax body are complicit in turning a blind eye to the vice. 

This was revealed to theCooperator by the then Commissioner-General of URA, Ms. Doris Akol, during a phone interview conducted prior to her replacement. 

 The annual Performance Report of 2018 jointly authored by ActionAid and Civil Society Budget Advocacy Group (CSBAG), both civil society entities that have been involved in fighting the outflow, support this assertion. 

 The report reads in part that, “More than $3,240,000 which is Shs11.8 billion flows out of Uganda annually as smuggling is aided by some of the corrupt border officials fuelling this phenomenon,” referring to Uganda’s loss to Illicit Financial Flows (IFFs).

 Smuggling is a global issue that is difficult to curb given its complex operations and the diverse commodities and persons involved.

 Global Financial Integrity, a non-profit, Washington, DC-based research entity explains smuggling as a form of IFFs, broadly known as the movements of money and value from one country to another, especially money and value that are illicitly earned, illicitly transferred and illicitly utilised.

Smuggling is common on the Uganda-Kenya border towns of Busia and Malaba as it is practiced by the seemingly innocent women, disabled persons and children who are paid to do that by rich traders.

Others pose as relatives going to mourn their loved ones across Kenya’s border yet their aim is to smuggle merchandise, denying government $270,000 revenue per day.

Jabweli Okello, 43, a smuggler at Malaba border says, “It’s the biting poverty that forced me into illegal trade and I know it. However, it has helped me to flourish in these difficult times.”

Okello (not real name), a renowned smuggler in eastern Uganda, owns a number of taxis that ply the Malaba-Kampala highway and he recently won a tender to manage a taxi park in Malaba Town Council in Tororo district.

Travellers are able to cross with commodities such as cigarettes, clothes, sugar and other general merchandise which they stuff into their clothing unnoticed by the border authorities.

Moses Musira, an independent tax policy analyst says, “It’s a hard thing for the government to think that it can stop smuggling. No. You cannot. There are government officials who benefit a lot out of smuggling and have amassed untold wealth, and government knows it.”

“Even those who work with URA are part of the clique,” he exclaimed, saying, “A businessman can smuggle five cars and give one car to URA officials because he knows how much he stands to gain from the four cars.”

Combating IFFs

Akol says URA is ready to support any campaign meant to combat IFFs into the country. 

She made these remarks while in a stakeholders meeting with other institutions like the Southern and Eastern African Trade, Information and Negotiations Institute (SEATINI) in Kampala recently.

“URA is already involved in some aspects of curbing IFFs. Our plan is to increase the collection of domestic revenue through stopping IFFs, especially arising from smuggling, misinvoicing, transfer pricing and other forms of aggressive tax evasion,” Akol said.

However, Musira says: “The only remedy for smuggling is to have it reduced but nobody should deceive the public that it can be stopped.”

He says for countries that share common borders to reduce the rate of smuggling, they should sensitize and educate their citizens around the border against the vice.

 “Uganda should ensure that it enforces pro-people tax policies that don’t deny people access to basic commodities.”

Musira cites a case in point where authorities in Kenya have banned cheap milk imports that flood their markets in order to protect local farmers and revive the agricultural sector.

“This kind of restriction encourages smuggling by those traders who cannot afford to buy Kenyan expensive products; they will be propelled to engage in the smuggling of Ugandan cheap products,” Musira sums up.

The Town Clerk, Busia Town Council, Vincent Okurut, in a telephone interview, says, “The problem of smuggling can only be stopped by enforcement of tough restrictions at entry points.

Julius Mukunda, the CSBAG executive director, says the economies of small towns are dependent on smuggling as a number of citizens engage themselves in the practice in order to earn a living.

Unfortunately, to Mukunda, this affects the abilities of URA to generate the expected revenue as much is lost through smuggling.

“Smuggling at the border towns affects youths negatively as most of them opt to smuggle and earn quick petty cash as opposed to attending school. This not only affects the families of these youths but also impedes government from achieving its overall objective of improving literacy,” Mukunda says.

Mukunda adds that the robust solution to smuggling is for government to impose heavier fines and penalties on smugglers. 

This story was produced by www.thecooperator.news. It was written as part of Wealth of Nations, a media skills development programme run by the Thomson Reuters Foundation in partnership with the Institute for the Advancement of Journalism. More information at www.wealth-of-nations.org. The content is the sole responsibility of the author and the publisher.

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