European Head of Mission Advises Uganda to Widen Tax Base

During a speech to an African Tax Administration Forum (ATAF) workshop in Kampala, the European Head of Mission Roberto Ridolfi has remarked that Uganda’s tax base needs to be widened urgently in order to increase the government’s revenues.

According to Ridolfi, increasing domestic revenue would encourage sustainable development and reduce donor dependency. “Mobilization of domestic resources is needed for the provision of public goods and central to the redistribution of wealth,” he stated. “This requires fair, effective and efficient tax systems and sustained commitment to addressing harmful tax practices and tax evasion.”

Ridolfi therefore called for a review of the informal and “widespread system of tax exemptions and investment incentives, undermining the efficiency of the tax system. In many cases, these exemptions benefit the well-off more than the poor or needy.”

He also added the European Commission supports countries’ interventions that are aimed at supporting their tax systems. “In the case of Uganda,” he said, “tax administration reforms in the past years have led to substantial improvements, and measures were recently introduced to boost tax compliance, such as the declaration of income for highly valued transfers of property.”

Finally, Ridolfi noted that, because of globalization and the worldwide economic uncertainty, the exchange of information through tax treaties is vital for tax authorities to improve the level of tax compliance.

Elizabeth Storbeck, an official from the ATAF Secretariat in South Africa, pointed out “the fact that business people and their merchandize can move freely across borders presented a challenge to nations that need to collect revenue, but that information sharing could help states to overcome such problems”.

2-May-2012