Uganda: Parliament Backs Sh57tn Budget, Calls for Tax Policy and Fiscal Discipline

30 January 2025

State Minister for Finance Henry Musasizi reassured Parliament that the government would not introduce new tax bills in the upcoming financial year, instead focusing on improving tax administration to enhance revenue collection.

Parliament has approved Uganda's National Budget Framework Paper for the 2025/2026 financial year, setting expenditure at Shs57.44 trillion --20% lower than the Shs72 trillion allocated for the current financial year.

The sharp reduction reflects fiscal constraints and a push for tighter spending controls.

Remigio Achia, vice chairperson of the Budget Committee, attributed challenges in domestic revenue mobilization to the absence of a national tax policy.

"We are advising the government to expedite the process of enacting the tax policy," he said, underscoring the need for structured taxation to support economic planning.

The budget framework is centred on "Full Monetization of Uganda's Economy," prioritizing commercial agriculture, industrialization, digital transformation, and market expansion.

However, Parliament flagged critical funding gaps, particularly in settling domestic arrears. Achia pointed out that the 200 billion shillings allocated for this purpose is far below the verified arrears of Shs14.06 trillion.

"The government needs to provide at least Shs1.5 trillion in the financial year 2025/2026," he urged.

Lawmakers also warned against excessive supplementary spending, arguing that it disrupts fiscal discipline.

The contingency fund allocation of Shs169 billion drew criticism for falling short of the Public Finance Management Act's 0.5% requirement.

State Minister for Finance Henry Musasizi reassured Parliament that the government would not introduce new tax bills in the upcoming financial year, instead focusing on improving tax administration to enhance revenue collection.

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