Friday, August 20, 2010

Unending poverty induced by Government

Written in 2005
By William Kituuka
The Government of Uganda released the Poverty eradication Action Plan (PEAP) 2004/5 – 2007/8. In the Foreword by President Museveni it is stated, “Over the last 19 years, Government has implemented policies geared towards eradicating poverty among our people. These policies have led to a substantial reduction in poverty levels from 56% in 1992 to 38% in 2003. In the current revision, Government has taken stock of the achievements so far attained and the remaining challenges…”
In the introduction it is stated, “The PEAP provides an over – arching framework to guide public action to eradicate poverty. It has been prepared through a consultative process involving Central and Local Government, Parliament, donors and civil society…”
The Revised PEAP makes good reading, but the truth is that it will not help Uganda out of the poverty situation! Poverty in Uganda is currently induced by the policies of Government (Executive). Government has many policies which are simply wasteful of would be useful resources for poverty eradication. As long as Government continues with policies which are consumption related hence increasing the wage bill for an ever increasing army of political appointees who are non – productive and the unnecessary increase of number of districts, one can be sure that the poor will sink more irrespective of the input in the PEAP document.
There has been an outcry to use resources currently being put to the Referendum to more productive use, but our ‘beloved leaders’ have said NO! Now, where is the sincerity to fight poverty?
My submission is that until Government policies in Uganda are reviewed, they in aggregate are simply abetting poverty in the country. The situation is that until there is effective demand in an aggregate form for the goods and services as backed by purchasing power of the masses, the war on poverty is simply a lost battle. Government must change heart, reduce tax rates on among other products petroleum. There should be sincere reduction of the Members of Parliament by having a given number of people represented by an MP. The crowded cabinet needs to be trimmed to reasonable size given the size of the country’s resource envelope. The RDC office a part creating friction in districts is simply not necessary but merely a burden to the tax payer. The Presidential Advisers are a group that continues to taxpayer resources after retrenchment from big public offices. This it is believed is done for historical connection reasons or other by the appointing authority. Unfortunately, these exert unnecessary burden to the taxpayers.
Increasing the tax rates is not the way to go in current Uganda as a strategy for increased Government revenue. If the traders and other tax paying units are crying about over taxation prior to increased tax rates, you can be sure that merely increasing tax rates will not lead to anticipated increase in revenue, in fact reduction of the rates is amore positive step as many tax paying units evade the taxes which is common knowledge. If taxes are manageable and the business climate good, more revenue will be realized and there will be least evasion of taxes. It is common knowledge that many would be business operators in the Ugandan market have failed to trade here, as the computation of the prices after tax would on average be higher than the ruling market prices by their competitors. This is no miracle given that many purported invoices for the goods traded locally are actually made at among other places City House in Kampala.
In a nutshell, the PEAP 2004/5 – 2007/8 will not help poverty. It is only if the Government of the day changes heart to have a positive out look on the increasing poverty, and takes advice already given to use scarce resources economically and productively as well as address the institutionalized corruption through which billions of resources are siphoned out of would be productive use to the economy.

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