Uganda Revenue Authority (URA) Commissioner General Allen Kagina said this on Wednesday when she addressed participants from Tanzania, Kenya, Malawi, Uganda and Zambia attending a Thomson Reuters training economic and financial reporting in Kampala.
 
In her presentation titled ‘Taxation and the end of aid dependence for Africa’ Kagina said although the role of aid in the economic development of recipient countries is a contentious issue it was high time authorities on the continent considered moving in a direction to wean government off aid.
 
“Domestic resource mobilization to African countries is potentially the biggest source of long term financing for sustainable development and it is the life blood of all state governance such as the provision of public goods and services.
 
“In this case taxation can be the main tool for domestic resource mobilization since developing countries are not able to fully finance their expenditure hence the aid,” said Kagina.
 
She said in 1991 Uganda taxes contributed to 32 of the country’s national budget with the balance being financed by grants and loans but pointed out that the situation has improved over the years.
 
“As of 2010 68 percent of the national budget was financed by taxes and this effectively reduced the gaps of supporting the budgets locally. Overall Africa must industrialize its economy to ensure that few raw materials are export and that countries participate in major trade of locally produced goods with the globe,” said.
 
She said reliance on aid and raw materials means many African countries remain vulnerable to upsets from the rest of the world.
 
“This implies that taxes should not be seen as an alternative to aid in the short run but as a component of government revenues that grow as a country develops. Aid should be channeled to productive sectors and revenue administration leading to a growth in domestic resource mobilization and an end to aid dependency.
 
She noted however that most revenue authorities on the continent are finding it hard to widen their tax bases because of growing informal sectors and lack of fast adoption of information communication technologies like electronic tax registers which can make it easier to trace undeclared taxes.
 
On Tuesday one of the trainers, David White noted that it is always important for authorities to champion efficient public services and development projects which he said can in the long run ignite voluntary payment of taxes.