On Tuesday 14th of June, the minister of Finance Matia Kasaija read the National budget planned for the FY 2022/23. We look through some spot outs of what it is, what it entails, and its effects on the economy and the citizenry.
Overview of a budget
Whereas budgeting is a process of establishing one, a budget is a financial Workplan establishing projected inflows and how they are to be spent in a given period (a financial year for this case). A financial year (case of Uganda) is a 12 months period ending 30th June of every year.
The major purpose of a public budget lies solely in the allocation of the scarce resources to public competing demands so as to attain societal goals and objectives.
The budget goes through a series of phases:
- Preparation and submission. (Different MDAs [Ministries Departments & Agencies], LGs [Local Governments] prepare their Budgets and are submitted to the Ministry of Finance, Planning and Economic Development).
- Approval of the Budget. Drafts are sent to Cabinet for review and approval before it subsequently tabled to Parliament for debate and final approval.
- Execution. The Budget here is being affected, funds received from different revenue sources are directed to the activities stated in the Budget. The major revenue sources for GOU include Local Revenue (Administered by local Governments), Taxes and fees (Administered by The Central Government), Debt (Domestic and Foreign), Donations and Grants.
- Audit and Evaluation. Is a post-performance analysis to ascertain the extent to which the Budget targets have been met. It’s highly geared by the Office of The Auditor General.
As the economy continues to recover and look forward to full monetization, a trend of increase in the Budget over time has been noted, thus the Uganda portfolio or projects benefiting the economy to make it better is growing. Trend shows budget figures: 29.2 Tn (2018),40.5tn (2019) 45tn (2020), 44.7tn (2021), 48.13tn (2022). Implying an overall increase (not average) of 65% in the budget figure from 2018.
The FY 2022/23 Budget
The FY 2022/23 Budget under the theme “Full monetization of Uganda Economy through commercial Agriculture, industrialization, Expanding and broadening services, Digital Transformation and Market Access”
The Parish Development Model is the lead driver project to receive 1.059 trillion for 100 million per parish countrywide. Forecast about its effectiveness has yielded positivity due to the reduced bureaucracy, and increased involvement of citizens in Government projects,” Matia says”. However, a question stands, with delays in funds reaching the sub-counties in prior periods to the extent of the financial year end will the funds stated reach parishes within the fiscal period? Commercialization is the way to go if we are to have a monetized economy, the PDM is majorly designed to uplift people in the agricultural sector which accounts for over 70% working force however with limited skills. Is the targeted 39% ready to drive commercialization?
The government has availed 100bn to Emyooga, a project aimed at providing funding to over 17 categories of skill evenly through the communities. With its ineffectiveness in the first phase (percentage withheld )[ https://www.parliament.go.ug/news/5265/emyooga-was-poorly-executed-parliament], will the 100bn yield result? How smarter is the Government ready to re-implement this? There’s surely a need to borrow a leaf from projects like “Entandikwa, and Bonna Bagaggawale”, strengthen supervision, and curb corruption for their achievement to happen.
Budget funds were allocated as infrastructure (14.48%), Human capital (28.64%), Economy (5.78%), Governance (14.29%), and Debt repayment (36.81%). Subsectors like local government (5.1 tn), Education and skilling (4.4 tn), security (3.987tn), and Health (3.722 tn) taking the Lion Share. We applaud the Government for considering the welfare of the citizens and their inclusiveness this financial year.
In order to ensure the government receives forecasted funds, different tax measures were introduced. In a bid to widen the tax base, the government has undertaken to amend various tax sections. The following amendments took effect from 1 July 2022:
Introduction of a zero rental income tax rate for individuals that earn annual rental income not exceeding Shs. 2,820,000 (implying 235,000 a month) and a rate of 12 percent of rental income exceeding that amount. For rental business, there was the introduction of a 30 % rental income tax rate with expenses capped to 50 percent for each year of income with no excess expenses carried forward to a subsequent year of income.
VAT (Value Added Tax). Is the Tax payable on goods, and services for the value gained at different stages of production, and distribution? VAT-exempt products were amended to include: the supply of oxygen cylinders or oxygen for medical use, the supply of assistive devices for persons with disabilities, the supply of airport user services charged by the Civil Aviation Authority, Repealed the exemption on VAT on imported services used in the provision of an exempt supply.
Stamp Duty. is a duty payable on every document that confers any right or liability upon being created, transferred, limited, extended, extinguished, or recorded. Amendments were made to effect a nil Stamp Duty to; Agreements relating to the deposit of title deeds or personal property or goods to another as a pledge or as security for a sum of money borrowed, agricultural Insurance Policy, Security Bond or Mortgage Deed executed by way of security for the due execution of an office, or to account for money or other property received by virtue of security bond or mortgage deed executed by a surety to secure a loan or credit facility, Clarification of the rate of Shs. 15,000 applicable on the transmission of property from the Administrator of an Estate to the Beneficiary.
Excise duty. This is a type of tax charged on goods produced within the country. Amendments were made to the same as Clarification of definitions of various products that attract excise duty such as spirits and juices, reduced excise duty applicable on opaque beer and fermented beverages made from locally sourced raw materials to 12 percent or Shs.150 per litre, whichever is higher.
Amendments to the Tax procedures code: Introduction of penalties for failure to provide information for purposes of Automatic Exchange of Information, introduced penalties for failure to adhere to Electronic Fiscal Receipting and Invoicing Solution and Digital Tax Stamps.
Will the budget be achieved to drive the proposed agenda?
A lot of effort is needed to ensure the budgeted figures are realized. The government is under pressure to improve public sector performance and at the same time contain expenditure growth. Citizens are demanding that the government be made more accountable for what they achieve with taxpayers’ money. Government should tackle endemic problems in Uganda like corruption to ensure that funds raised under the budget are directed towards intended objectives.
FOR GOD AND MY COUNTRY