By Johnson Kanyesige
Taxpayers in Hoima City have been rallied to embrace the Integrated Revenue Administration System (IRAS) if they are to witness improved service delivery and feel the impact of their taxes.
The call has been made by Mr. Adam Babale, the secretary of the Local Government Finance Commission in an exclusive interview with Spice FM. On Thursday, a team of the commission camped in Hoima City to train all Revenue Officers on effective administration and collection of taxes.
Babale warned that the City has lost a lot of revenue in terms of taxpayers collaborating with some officers responsible for collection of taxes, which in the end deny them services.
“All the monies that is required to be paid to Hoima City must be paid through the system called IRAS. Nobody should be told to pay money in cash but what is paid in cash does not reach the city offers and when taxpayers do it, they should know this money is always stolen.
Babale adds that embracing electronic payments will help minimize irregularities and curb tax evasion.
Hoima City Council has registered growth in revenue collection. In the financial year 2023/24, Hoima, as one of the newly elevated cities in Uganda, Hoima City experienced a notable increase in local revenue collections, contributing to the overall rise among the new cities from Shs19.6 billion in FY2022/23 to Shs32.7 billion in FY2023/24.
Specifically, Hoima City’s collections increased from about Shs1.3 billion to Shs1.9 billion, indicating a positive trend in revenue growth. This improvement is attributed to efforts such as automated revenue administration and increased property rate collections, with Hoima aiming to capitalize on its rising property values to boost tax revenues substantially with projections suggesting potential income growth by up to 750 percent in property rates alone.
Additionally, Hoima is investing in infrastructure such as the Hoima Stadium, which, beyond sporting events, aims to generate revenue through sports tourism and corporate activities, helping to further increase local government revenue in the medium term.
According to the ministry of finance, the government is targeting to recoup its USD130 million investment in the stadium within 10 years by leveraging these diversified revenue streams.
But this will be achieved if taxpayers pay their taxes on time and avoid cash tax payments which are easily exposed to theft and mismanagement, according to the City Mayor Brian Kaboyo.
Kaboyo adds that stolen tax revenues create budget inefficiencies by inflating procurement costs and causing widespread fiscal mismanagement.
“When funds meant for public projects are diverted, projects are left incomplete or of poor quality, leading to reduced social welfare outcomes and public dissatisfaction. This situation also erodes public trust in government institutions, weakening taxpayers’ willingness to comply with tax laws, which further reduces revenue collections in a vicious cycle” says Kaboyo.
Ismail Kusemererwa, the Executive Director Mid-Western Anti-Corruption Coalition-MIRAC says URA neds to sensitise taxpayers on the use of IRAS noting that there is need to have a less cashless economy since cash payments are easily swindled affecting service delivery.
“If tax revenue is stolen or misappropriated, the government faces significant budget shortfalls that limit its ability to finance essential public services such as healthcare, education, infrastructure, and social welfare programs like SAGE, EMYOGA, youth livelihood etc” says Kusemererwa.
Uganda loses an estimated annual revenue of about 8 billion to 10 billion Ugandan shillings (UGX) specifically from Value Added Tax (VAT) fraud alone, including schemes like the “missing trader” fraud where traders create fake invoices and evade VAT payments.
More broadly, Uganda faces much larger tax revenue losses due to illicit financial flows and tax evasion, with estimates reaching as high as several trillion shillings annually. For example, illicit financial flows and other forms of tax abuse could amount to losses in the range of UGX 2 trillion or more each year, significantly undermining the national treasury.
These losses represent a substantial financial gap that affects the government’s ability to fund public services and development projects effectively. Efforts by the Uganda Revenue Authority to investigate and recover lost taxes have yielded recoveries of tens of billions, but the challenge remains large and ongoing.
