Wednesday April 22 2015

Civil society organisations wants graduated tax back

Kampala Capital City Authority

A Kampala Capital City Authority tax enforcement officer monitors businesses for tax compliance in Kampala. A civil society group wants government to reintroduce graduated tax to encourage hard work among youth. PHOTO BY FAISWAL KASIRYE 



A coalition of civil society organisation, represented by Civil Society Budget Advocacy Group (CSBAG) wants the government to reintroduce graduated tax.
They argue that it will instill hard work and responsibility among youth.

Graduated tax is an old form of taxation which was imposed on adults. It is one of the examples of direct tax. It was introduced in Uganda during the colonial days as a replacement to the Hut tax.

It was abolished in 2005 after pressure from politicians, who described it as ‘a primitive’ tax and crudely collected despite its significance to the local government.

“Government should painstakingly re-introduce the graduated tax,” read the CSBAG report released last week, containing its budget proposals for the next financial year 2015/16.

According to CSBAG coordinator, Julius Mukunda, who presented the report titled; ‘Every Shilling Counts,’ graduated tax will instill a sense of purpose among mainly the youth whose focus and attention seems detached from realities on the ground.

Information and National Guidance minister, Maj Gen Jim Muhwezi, said in an interview yesterday that the country has since moved on from that coercive method of collecting taxes.

He said: “We believe in empowering people economically then through that empowerment they will be able to contribute into the government coffers. We don’t have to go around coercing people. That was why it was scrapped in the first place.”

He continued: “Their (CSOs) advice has been noted but we must think of the reasons why it was scrapped in the first place. As government, our responsibility is to provide enabling environment for everybody to thrive and contribute towards their wellbeing, families and the country.”

A statement by the Minister of Finance, Planning and Economic Development, issued yesterday in response to the matter, said the Budget is already before Parliament and that Civil Society Organisations (CSOs) like any other persons, are entitled to their opinion and have leeway to present their views on the same to Parliament.

It further said CSOs have every right to convince Parliament that what they are suggesting is both practical, viable and has minimal policy consequences.

other proposals on raising revenue
Other proposals the civil societies are fronting include, revisiting the double taxation stance by government to tax multilateral companies whose subsidiary companies operate locally. This, they envision, will bring in Shs100 billion per year.

They also suggested that imposing an environmental tax on firms and companies that have a carbon foot print on the environment will raise more revenue. With that, they envision government will collect Shs100 billion.

Re-introducing road tolls on new infrastructure transport projects. This, they hope, will yield about Shs150b per year.

Taxing cash withdrawals above five million, intensifying property tax which they say will generate not less than Shs50b per year and imposing special taxes for infrastructure projects is the revolution that is needed.