Friday September 7 2018

Tobacco raises more tax money than any other farming activity

A tobacco farmer in Hoima District weeds her

A tobacco farmer in Hoima District weeds her garden. The crop remains a key source of revenue for both farmers and the government. FILE PHOTO 

By Christine Kasemiire


Tobacco growing fetched more money in terms of tax than any other activity in the agricultural sector, according to data obtained from Uganda Revenue Authority (URA).
More than Shs18b, according to the data, was collected from tobacco growing out of a combined sector contribution of Shs125b in 2017.
However, the data shows, the Shs18b was a drop from Shs19.1b that it raked in in 2016.
Tobacco, according to data, has dominated tax contribution over the years in the agricultural sector but continues to be threatened by heightened pressure on cigarettes, a key product of the crop.
Mr Ian Rumanyika, the URA public and corporate affairs manager, told Daily Monitor, tobacco leads the tax contribution in the agriculture sector because it highly taxed to discourage cigarette consumption.
“In comparison with other agricultural produce which are incentivised to boost the sector [tobacco is highly taxed. Besides that, the tobacco production chain is also very compliant,” he said in an interview.
Tobacco beat major export crops such as coffee, tea and other commercial produce.
British American Tobacco Uganda through Mr Mathu Kuinjuri, the company’s managing director, has previously raised concern on the rate of taxation in the tobacco sector.
In April, he petitioned Parliament to review the Excise Duty on cigarettes within East Africa.
In the petition, Mr Kuinjuri said, cigarettes within the East Africa Community should be treated as local products as opposed to the burden of the high Import Tax bill.
Tobacco has also been affected by various government directives with the most recent one making it illegal to smoke or sell cigarettes in public places.
Raising animals, which contributed Shs15b, silvicultre (Shs11b) (growing trees), growing cereals (Shs9.8b) and growing non-perennial crops (Shs9.4b) round off the list of the largest tax contributors in the agriculture sector.
URA, according to Mr Rumanyika continues to have challenges in terms of collecting taxes in the agriculture sector due to the informality of many of people involved.
In a demonstration presented during the Uganda Netherlands Business Convention in Netherlands, Mr Rumanyika told participants that URA had embarked on registering commercial farmers in order to broaden the tax base.
So far, he said, they have been able to register about 66,765 commercial farmers, some of whom have already been drafted into the tax fold.
The meeting, Mr Rumanyika said, sought to engage Ugandans in the Schengen countries to invest in agriculture in order to benefit from a number of tax incentives.
In 2017, wholesale and retail trade contributed 27 per cent to gross domestic product followed by manufacturing, which contributed 21 per cent.
Financial activities and insurance contributed 8.9 per cent while Information and Communication Technology contributed 7.2 per cent. Agriculture contributed 0.9 per cent.