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Passports fees drive up non-tax revenues, says Ministry of Finance report

More Ugandans are acquiring passports, with fees paid for the travel document contributing to a surplus in non-tax revenue in November, an update from the ministry of Finance has shown.

At least Shs 43.2 billion was collected in November, above a target of Shs 17.6 billion. Passports, migration, and mining fees accounted for the surplus, according to Finance.
Non-tax revenue is money earned from sources other than taxes. Hundreds of youths are applying for passports as they seek work in the Middle East.

The journey to the Arab world has raised concerns about safety, with the parliamentary committee on gender reporting in October that 48 of these labour exporters had died by suicide or being murdered. The fees paid for passports, however, are boosting government funds. An ordinary passport is acquired at Shs 150,000.

The Finance ministry update shows that government collected Shs 1.1 trillion in November of which Shs 1 trillion was tax revenue and Shs 43.2 billion was non-tax revenue. Indirect taxes underperformed by 16.1 per cent. Indirect taxes are levied on goods and services rather than on income or profits. The burden is met by the final consumer.

The ministry says there was strong performance on taxes paid on employees’ earnings or Pay as You Earn (PAYE), corporate tax and tax on bank interest. This points to some hope in the economy as companies are posting profits while banks are earning from borrowers’ ability to pay back loans.

Stephen Kaboyo, the director of Alpha Capital Partners, told The Observer that as the year comes to a close, the general  economic sentiment has improved somewhat, characterised by lower food prices as a result of good weather conditions in the second half of the year.

“There has been a modest recovery in private sector credit. There  is reason to remain optimistic and focus on the medium-term prospects that indicate growth  is likely to bounce back primarily driven by anticipated investments in oil and gas in 2018 and improvements in other key sectors of the economy,” Kaboyo said.

According to Bank of Uganda, the current account deficit – showing a country imports more goods, services and capital than it exports, deteriorated from $303.9 million to $520.1 million during the three months to October 2017, due to large imports ahead of the festive season.

The central bank added that export earnings decreased from $863.6 million to $793.1 million between July and October as non-coffee exports fell. This affected the strength of the shilling, which saw it trade at Shs 3,660/3,665 buying and selling, respectively in October.

It strengthened in November and December as more Ugandans and non-governmental organisations spent more money in the country for festivities, according to BOU, trading at Shs 3,630/3,640 a pair. Analysts say the shilling will weaken further after Christmas holidays.

“A weaker shilling by implication raises the cost of living, considering the fact that Uganda is a net importer. However, on the other hand, a weaker shilling plays in favour of exports by boosting export revenues.

This scenario is also likely to affect the cost of servicing the country’s external debt, making it more expensive in the short run,” said Kaboyo, indicating Uganda must push up its exports if the local currency is to strengthen in the new year against major trade currencies.



+2 #1 Bisoboza 2018-01-05 02:18
Some time last year, people were seen queuing in thousands at Passport Offices Industrial Area reportedly due to non-availability of passport books.

If revenue collected from sale of passports is such a successful story, why then should it take that long for the relevant authority to replenish stock when the books run out of stock?

Was the scarcity artificially created for what could be selfish reasons?
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