Gulu, Arua, Soroti cities fail to raise revenue

Authorities in Arua, Gulu and Soroti regional cities have recorded revenue losses in their first two years of operation as a result of  business communities evading taxes, the Daily Monitor has learnt.
This was revealed during an inter-city policy dialogue on local revenue mobilisation and public service delivery in Gulu City on Wednesday.
In Gulu City, the administration ended the 2019/2020 financial year with only Shs1.1b, leaving a deficit of Shs3.4b of the projected Shs4.5b.

In 2020/2021, while it claimed to have improved its revenue collection strategies, the city only realised Shs1.7b of the projected Shs4.7b, a figure much less than that of the financial year 2021/2022 at Shs2.7b.
Mr George Nicholas Kidega, the Gulu City revenue officer, said the business community has continued to evade taxes.
 “Only recently (after lifting Covid-19 lockdown) we have managed to steadily stabilise, people were selling everywhere on the streets and avoided taxes. There has also been a high default rate among rented stores, including stalls in the markets around the city,” Mr Kidega said.
He added that the situation has been worsened by an incompetent team of revenue collectors.

“Besides that, we have illegal collection of revenues and forgery of general receipts and trading licences. By the way, one other problem has also been frequent central government pronouncements on local revenue, collections, for instance taxi, bus park user fees, some of which are not enforceable,” Mr Kidega said.
Meanwhile, in the financial year 2019/2020, Arua could only realise Shs1.94b (64 percent) of the projected Shs3 billion. 
In the financial year 2020/2021, the city only realised Shs2.14b (66 percent) of an estimated Shs3.23b of revenue, a figure slightly higher than its 2021/2022 revenue earnings which stood at Shs2.68b (58 percent) of the estimated Shs4.59b.
Mr Brian Ilongi, the revenue manager for Central Division, Arua City, said the city was continuing to lose revenue to mobile vendors and hawkers.

“Much as hawking is provided for in the law, we don’t encourage hawking because they don’t pay revenue. The vendors don’t want to go inside the new market built for the same reason that they would be charged,” Mr Ilongi said.
He added: “There is defiance and rejection of new tax rates for example in the case of bus and truck (transport) operators who recently protested a new annual (Shs2.7m) fee instead of the previous monthly Shs240,000.”
Just like Gulu and Arua cities, Soroti authorities have registered the same challenges.
In Soroti City, authorities realised only Shs1.6b of a projected Shs4.12b in the financial year 2020/2021. In the financial year 2021/2022, the city realised a 21 percent deficit in its budget when it only collected Shs1.2b of the projected Shs1.3b.

The dialogue was organised by Oxfam Uganda, Seatini-Uganda and the European Union under the Fiscal Justice for Women and Girls project Africa.
Mr Mark Mulumba, the project assistant for the Fiscal Justice for Women and Girls project Africa, said the dialogue was convened to enable authorities of the cities develop a platform to influence policymakers on budget priorities.
“People need to see a better level of accountability and this will reduce the level of political fights and influence to an ordinary taxpayer. If the bigger budget is going into administration and not service delivery, it demotivates them,” Mr Mulumba said.

Way forward 
Ms Margaret Acako, the Soroti City revenue officer, said they have introduced the integrated revenue administration which has eased collection of revenue.
“We have also formalised our revenue enhancement plans and development of changing parishes, including fresh valuation of properties in the city for the purpose of property taxes with an increase in the tax rate,” she said.
Mr Henry Ssemanda, a local revenue mobilisation specialist, tasked the city authorities to embrace decentralisation.  
“If 89 percent of your budget is funded by the central government because you don’t raise enough revenue, it is like we are running as central government units and they will always influence your budgets and priorities and this negatively impacts on your progress,” he said.
“Decentralisation improves the effectiveness of service delivery, whoever gives you the money, is the one who controls you, and that is one big challenge local governments are undergoing, all decisions are made by the central government,” Mr Ssemanda said.