HOW AKOL, MUVAWALA WON HEARTS AT GOV’T RETREAT IN MUNYONYO
By Our Reporters
NPA Executive Director Dr. Joseph Muvawala’s opening statement was a caution. “I’m not here to tell people what they want to hear,” he said at the beginning of his presentation. This was Thursday last week at Speke Resort Munyonyo where he was among the many Accountability Sector leaders who accounted for their actions and omissions at this year 2018’s Accountability Sector Joint Annual Review (ASJAR) meeting. Charged with enforcing GoU’s long term development planning, the National Planning Authority (some call it the gov’t think tank on planning) has lately been notorious for the government-wide mandatory Certificate of Compliance (CoC) they annually issue. Currently one of the things accounting officers annually look forward to with a lot of apprehension, the CoC mercilessly exposes and scorns worst-performing MDAs while praising best-performing ones. Among other things, performance is rated basing on the extent to which MDAs budget to spend public resources in a manner that enhances the realization of the country’s development objectives as contained in the National Development Plan (NDP II) which itself derives from the Uganda Vision 2040. This vision document in simple terms articulates our development agenda as a country guiding on how to become a middle income economy by 2040. The Vision is to be rolled out or implemented within 30 years; split under 6 NDPs each lasting 5 years. Now we are on NDP II (2015-2020) and it’s the mandate of NPA to ensure that this Vision 2040 (comprising of different NDPs) is achieved because failure will politically cost President Museveni as his political opponents will have him for dinner at the subsequent elections. Already they keep pointing at the slowed Vision 2040 as proof he has outlived his usefulness as a leader. It indeed started as a political statement indicative of Museveni’s wish to transform Uganda from a peasant economy to one that is middle income status with all its accompanying ingredients. This is why for many MDA heads, NPA has taken on the policeman-like reputation being an enforcer of compliance to the politically very important NDP II.
Controversial as it was, Muvawala’s presentation won hearts of especially CSOs and private sector representatives at the meeting. Indeed there was applause when he wore a bold face at the beginning of his submission and said he was going to utter the uncomfortable truths many wouldn’t be comfortable hearing. At some point he said there was improvement, resulting from NPA insistence, because currently all government MDAs have Strategic Development Plans. “What remains is the quality of plans and the extent to which they are aligned and funded under budget allocations,” he disclaimed making his presentation sound even more controversial. “The truth is we are doing well but we can and must do better. That is why I’m saying all these things. Our macro targets as an economy remain below target,” Muvawala said in his characteristic eloquence when it comes to discussing economic matters. He kept making short but precise points-and he rarely elaborated. He perhaps preferred to speak with restraint given this was an open session with media cameras pointed at him. He said whereas it was mandatory to translate MDAs’ plans into budget allocations, few entities were doing this to his satisfaction.
He sounded even more controversial when he repeatedly praised Uganda Revenue Authority (URA) whose Commissioner General the indefatigable Dorris Akol sat next to him during that particular panel discussion. For an entity whose performance the President has been criticizing so furiously in his protest letters, few must have expected Muvawala to speak to their defense. He maintained URA track record had been misunderstood by a population that was expecting too much from tax body that is inadequately facilitated to perform its mandate. He said from his NDP-compliance audits, URA was doing very well when it comes to proceeding in a planned way. He said their curve was raising when it comes to the quality of plans at a time the other MDAs’ planning quality was worryingly going down. He said URA was different from many entities whose plans prioritized something contrary to what NPA expects. “It’s for instance not sufficient to comply along the number of class rooms built anymore but learning achievements,” Muvawala said sounding rather philosophical. On those faulting URA’s performance, Muvawala (a Museveni blue eyed boy) veiledly said: “We must invest more in revenue mobilization and less in blaming URA for [diminished] tax collection. Revenue collection shouldn’t come before revenue mobilization. They can only collect so much if we adequately do revenue mobilization. It’s important that we do tax research before pressurizing URA to implement new tax policies. Benefit-cost analysis is very important. If the research shows costs are higher you don’t implement. You may implement the tax and get Shs100bn but at what cost? These are very important questions to ponder,” Muvawala said as he invited the audience to reflect on the impact of OTT on financial inclusion which many government entities have been advocating. “When you tax mobile money, which impact does it have on financial inclusion?” He referred to the fact that at Finance Ministry, the department of budgeting [headed by Kenneth Mugambe] is more facilitated and prioritized than that of Economic Affairs [headed by Moses Kaggwa] which clearly shows that, as an economy, we are more expenditure-oriented than revenue mobilization. Whereas Economic Affairs supervises revenue-collecting URA, Budgeting Directorate plans spending of revenues that have been collected. Muvawala said such improper prioritization “often burdens [URA] the tax collector.” He also invited Accountability Working Group members to reflect on the work of UFZA specifically on “whether we aren’t issuing more free trade zones licenses than what is appropriate.” This too was a controversial point because earlier speakers had commended UFZA for establishing so many trade zones and issuing so many licenses in such a short time. Muvawala also spoke about the NTR (non-tax revenues) which his NPA previous reports had faulted some MDAs of not handling properly. He wondered why MDAs like UCC, UWA, Immigration and others still collect this revenue and insist on spending it on source. He described this as inappropriate conduct and insisted URA is the professional tax body that should be left to professionally do its work. “NTR is supposed to be collected by URA and all MDAs must comply. Tourism roads remain undone and yet UWA collects government money and spend it the way they want. Yes UWA has the best buildings in town but the working group should be keen in scrutinizing UWA not to retain government money collected by them. Immigration; why should we still pay visa fees at the counter? Immigration should just issue receipts at the counter and collection of that money should be by URA and not Immigration,” he said to deafening applause. “What I’m saying is we should let the professional tax collectors do their work. What is the revenue collector doing at KCCA whose mandate is service delivery? That role should revert to URA.” Muvawala submitted that government agencies should be let do what they are best suited to. “In my case I’m NPA charged with development planning and please don’t bog me down with the implementation because that is not my work.” He suggested future such retreats should be used to reflect on the country’s debt stock which he said is too much and also tax exemptions whose impact on overall tax collection by URA, he said, should be comprehensively examined.
Later during question time, NGO Forum’s Richard Sewakiryanga challenged Muvawala on why MDAs would continue getting money appropriated to them without having any SDPs in place. The NPA boss said it was upon MPs to act using the CoC NPA has actively been issuing to guide the budgeting process. He also said the carrot approach hadn’t been in vain because today, more MDAs have SDPs than before. He said NPA has supported entities grow planning capacity citing UCI and Uganda Heart Institute whose Strategic Development Plans (SDPs) were developed as a joint effort with NPA. These two health Institutes are these days benchmarked upon by counterparts from elsewhere in EAC region. When CAA seemed overstretched, NPA came in to co-produce the feasibility study for revival of the Uganda Airlines. Yet that isn’t all. Muvawala said the law now mandates NPA to take over the planning function for any sector (not just an entity) they deem failing. He said CoC had greatly strengthened budgeting process because it’s all MPs now depend upon to decide to appropriate or not appropriate money for non-compliant entities. He said the larger burden lies with MDA heads and accounting officers “because why should people put on ties and enjoy being called CEOs leading sectors that don’t have Strategic Development Plans?” He also reacted to another question raised by PSFU’ Gideon Bagadawa who said the fact that we have less than 1.5m registered tax payers out of a population of 40m people is proof of URA’s ineptness. Bagadawa also complained of a large informal sector attributing it to URA but Muvawala differed. He said formalization of businesses has to be everybody’s duty because business registration by URA can’t suffice. Regarding Uganda’s business competitiveness, Muvawala said we need to overcome constraints like too much time being lost in endless litigation which he said scares off many would-be investors. He vowed to use NDP III to prioritize conflict resolution to shorten time businesses lose in courts of law.
DORRIS AKOL’S TIME;
The URA Supremo too made some excellent explanations. She devoted time to answer Bagadawa’s query on why of the 40m Ugandans only less than 1.5m were registered tax payers under URA. For a woman whose entity has endured so much criticism lately, Akol calmly explained why registered tax payers were so few out of such a big population. Regretting that Bagadawa, who raised this query was already out when she was answering, Akol said 20m (50%) Ugandans are below 18 years hence being ineligible for taxation. Of the remaining 20m, she said, less than 15m are in any form of economic activity for them to be directly taxed. She said of the 10-15m economically active Ugandans, many are in informal business that can’t easily be registered for taxing purposes. She also spoke of the tax threshold showing that not all active economic activities qualify to be taxed. For VAT, she explained, it must be a business with annual income of more than Shs150m. Income tax is payable by earners whose income annually exceeds Shs2.8m and Shs235,000 per month. She said, contrary to what Bagadawa thought, not all NSSF members are eligible for PAYE taxation. Akol gave the example of security firms whose guards are NSSF-registered but not eligible to pay PAYE because many of them monthly earn as low as Shs150,000 in salary. She added that going by TIN numbers parse would be an illusionary way for Bagadawa to understand how the tax system works because many economically active Ugandans pay (indirect) tax without needing a TIN. “For example a taxi driver or Boda rider pays tax each time he fuels his vehicle but doesn’t need to be on the tax register,” Akol eloquently explained. She admitted URA can and should be doing better and highlighted areas that are being improved upon including digitalizing the issuance of tax invoices to those involved in wholesale and retain trading. Digitalization will also ease filing of returns. She said the big challenge is, despite being the 2nd revenue contributor, wholesale and retail trade was elusive to collect revenue from because much of it is informal. Akol was also commended by CAOs present for helping local governments code their potential revenue sources to boost revenue collection at that level. Anti-Corruption Coalition-Uganda boss Cissy Kagaba accused URA of taxing the private sector out of business but Akol calmly explained what they do to shield distressed businesses from collapsing; including waiving tax obligations and intensifying financial literacy to overcome avoidable mistakes. Akol also explained how some government entities like Law Council constrain revenue mobilization and collection efforts. “For example we proposed that production of TIN numbers becomes a requirement for Law Firms whenever they seek to renew practicing licenses. Law Council let us down and they said TIN number isn’t a requirement for registration to practice law,” Akol said painfully regretting not being able to adequately tax the billions some of the lawyers make from their work.
The 4 major tax sources for URA are manufacturing, trading activities, service sector including telecoms and international trade especially motor vehicle importation. Even on these ones, Akol said, URA remains heavily constrained to collect much more than is being collected. She for instance said they can’t adequately carry out regular tax compliance audits on the telecom sector and rental tax as well as oil & gas-related activities. She later explained to this news website that, whereas these audits are done by URA staff, not much can be done without the relevant audit operations being sufficiently funded in the budget allocation given to them by the finance ministry. These audits have to be conducted by highly skilled and experienced personnel but URA faces staff retention problems despite deliberate efforts being undertaken to routinely address staff welfare concerns. In his key note speech DPP Mike Chibita said this is a case of URA being a victim of its own success: whereby training its employees makes them attractive to higher-paying organizations. Regarding withholding tax, Akol said their operations have been constrained by delayed publication in the gazette of the guidelines required to register new WHT agents. Akol reported that despite funding limitations, URA had managed to complete its 22 storied headquarters in Nakawa, a thing she said will enhance efficiency in URA operations. Remarkably this is all money generated locally with no foreign assistance. An enchanted member, speaking from the audience, complimented Akol by insisting that URA merits commendation because at 58%, domestic taxes now clearly exceed revenues raised from international trade at 42%. For comments, call, text or whatsapp us on 0703164755.