Uganda Should Drop Idea Of High Tax Budget

(The following blog posting is from Joseph Kasibante, President of the National Taxpayers Protection Organisation in Uganda.  TPA supports Mr. Kasibante, and all taxpayer and free market groups around the globe) Although high taxes are generally assumed to be the panacea to balance government budget and finance government expenditure, a lower tax budget and accountable governance has proved to be the most scientific methods government can adequately use to stimulate the economy. A lower tax budget leaves money in people’s pockets to buy things they want or money that can be saved and invested in whatever manner they choose.

Consumers can demonstrate their power by influencing the course of the economy and making themselves heard in matters of ethics and policymaking. In what has come to be known as the ‘wealth effect’ the  consumers step up purchases when they feel richer and cut back when they feel poorer, shows how a high tax budget accompanied by waste can push the economy into recession.

In simple terms budget can be interpreted as a future plan we cannot immediately fulfill. The personal or family budget is a financial plan that helps individuals to balance income and expenses. A business budget is generally used as a tool to formulate intelligent decisions on the management and growth of a business venture. However, the most complicated budgetary process is a government budget, which is a plan for the collection and expenditure of monies needed to defray public expenses.

There are five rigid stages of government budgeting: preparation, presentation, authorization, execution, and audit. I will dwell on budget preparation stage where taxes are the focal point of the budget framework.  Clarifying  the science of  a lower tax budget evolving  higher purchasing power in  the whole economy, taxes must also not be too law to meet government priorities.

Various estimates and proposals have been made on the possibilities of reducing the expenditures of government budget; consequently rational taxation and priority allocation of funds are the best options.

In Uganda various ways have been attempted to fight poverty among them; actual cash advances to different groups like; widows, youth, disabled, the aged, veterans, women, students, just name them but none with rewarding effect on consumer spending  than a lower tax budget. Government cash advances to different groups have had their negative impact because they are not advanced on scientific merits. The end result out of the haphazard methods sees the beneficiaries misusing the money in foolish ways like drinking and sports betting. Some beneficiaries of government cash see it as a pay back for their votes others as their share of the ‘national cake’ etc…

So, it is the lower, simple and stable tax budget and accountable governance that consolidate upper class, builds middle class and stimulates consumer demand. Lower tax budget encourages saving, private investment and high levels of productive employment and is the scientific means it reduce poverty. Intelligently originated lower tax budget creates better living standards and finally controls inflation.  Also an intelligent monetary policy should adequately be applied to balance fiscal policy.

Lower personal income and corporation-profits taxes would improve the general welfare. Besides, pension allowances and savings would not be diluted by inflation. The current Social Security surplus should be brought out into the open where it can be seen and where it can be the subject of public discussion and public policy. And that is exactly what would happen with the adoption of a consolidated cash budget.

The accumulating reserves in the Social Security and other retirement accounts must be restored to investment and employment if we are to avoid depression. Billions shillings every year from the people’s income is drawn without restoring it towards purchasing demand.