- Government's reliance on domestic borrowing is not only crowding out the private sector but also raising capital costs.
- KACITA critiszed Ministry of Finance's decision to continue pushing for the use of EFRIS
Image: Courtesy photo
Private Sector Foundation Uganda (PSFU) has expressed concern about the government's continued move toward domestic borrowing.
Speaking at the Post-budget dialogue organised by PSFU , Sarah Kagingo, the Vice Chair claims that the government's reliance on domestic borrowing is not only crowding out the private sector but also raising capital costs.
She explains that with the significant increase in the tax target, combined with domestic borrowing, businesses will suffer.
“With Significant reliance on domestic borrowing and refinancing maturing debt, this could crowd out private sector borrowing, raising interest rates and limiting access to affordable credit”,Kagingo stated.
Kagingo urged the government to increase its efforts to formalise the informal sector, as this will broaden the tax base while also easing the tax burden on the few taxpayers.
At the Same event traders characterized the 2024-2025 budget as tax-heavy, Issa Sekito said the 72 trillion budgets will primarily affect an already struggling business community.
He also criticized the Ministry of Finance's decision to continue pushing for the use of EFRIS despite ongoing negotiations with the President.
“EFRIS has been emphasized that it’s a tool given to Uganda Revenue Authority to collect more so that they can hit the targets, this is a threat because negotiations are still on going with the government yet the tool is already handed over to URA to use that’s a big challenge for the trading community”,Sekito said
Ssekito also took the opportunity to call for a review of the country's tax policies. He claims that Uganda's decision to tax textiles by the kilo is not only archaic but also inconsistent with World Trade Organization policies.
“The charging of Kilos on Textile and garments is wrong because items are internationally paid for using Gatt valuation ,the trade sector is facing many challenges whose concerns are yet to be resolved and if they are not resolved ,the targets will not be hit” Sekito narrated and advocated for an immediate review of this tax policy.
While officiating at the same event Ramathan Ggoobi the Permanent Secretary and Secretary to the Treasury for Ministry Of Finance reaffirmed the government's commitment to supporting the private sector.
This, he claims, is being accomplished by focusing on issues that affect trade, the most prominent of which is the country's road network.