Failure by East African countries to harmonise their tax laws will continue to frustrate trade and investment in the region, experts have said.
Speaking at the Regional Dialogue on Domestic Mobilization in the East African Community in Kampala last Thursday, the experts said the issue of tax harmonization has remained overshadowed by politics.
“We need a political agreement from all member countries of the EAC to address the issue of tax harmonization. Working on the security levels to will help in the attractions of investors too,” Izabella Karpowicz, the IMF Country Representative for Uganda, said.
Mr Dicksons Kateshumbwa, the MP for Sheema Municipality and a former Commissioner of Customs at Uganda Revenue Authority, blamed all tax and trade failures in the EAC on failure to have an implementing and enforcement mechanism of policies made.
He said that there are many policies that would respond to the current hiccups, but they have never been implemented, mainly because countries refuse to give up some national interests for the sake of integration.
“We are at different levels of industrialization and along the way we failed to agree, nation interests came in the way like BUBU as oppose to Buy East Africa, Build E.A. There is little progress because there is more of expanding markets than harmonization,” he said.
Esther Kisembo, a Programme Coordinator at Action Aid Uganda, said EAC countries continue to offer different tax incentives and exemptions which result in the foregoing of the much-needed revenue to finance social services.
EA Legislative Assembly member George Stephen Odongo, who is also the chair of the EALA Uganda chapter, said some of the challenges they face include the many directives from the Council of Ministers, as well as the differences in legal regimes.
Odongo advised the countries to use the dwindling foreign aid as an opportunity to develop local capacity because locally raised revenues are the most sustainable way to run budgets.
The Regional Dialogue on Domestic Mobilization in the East African Community was held under the theme: Enhancing Domestic Resource Mobilization through Tax Harmonisation and Product Debt Management. Sheraton Hotel Kampala.
Jane Nalunga, Executive Director of SEATINI of UGANDA, the organisers of the dialogue, said as a country and the EAC Region, we need to position ourselves better in the ever changing and dynamic global economy.
EAC Affairs Minister Rebecca Kadaga said focusing on domestic revenue is now more important than before because the external support sources are dwindling.
She however noted the recurrent hiccups in the regional integration process like border closures, which she said is affecting the economic progress of the countries.