Is government forcing Budget down Parliament’s throat?

With the deadline imposed on Parliament by law within which to approve the Budget fast-approaching, MPs continue to blame the Executive for ignoring changes they proposed to the Budget framework paper.
Parliament’s Budget Committee fired the first shot, with members accusing the Finance ministry of entirely neglecting recommendations for changes to the National Budget framework paper.
“Do you consider the recommendations of the House as critical or you treat them as irrelevant; does the ministry (Finance) recognise the role of Parliament on the Budget framework paper?” asked committee chairperson Amos Lugoloobi (NRM, Ntenjeru South).
Junior Finance minister David Bahati conceded, saying: “There are some (recommendations) that we have addressed and there are others that we have failed to address,” promising the list of those addressed and those that they have not addressed.

Assurances from Mr Bahati that the recommendations were incorporated in the proposed Budget estimates could not be entertained, with MPs asking the minister to “go back and bring the matrices detailing what exactly has been incorporated”.
Mr Bahati evoked MPs’ anger when he presented a document titled “Budget for Financial Year 2017-2018,” in which a breakdown of the coming financial year allocations per sector was made.
The proposed allocations, MPs said, took no cognisance of the recommendations by Parliament, upon which a unanimous conclusion was made by the legislators that the ministry does not take them seriously.
Parliament proposed a myriad of changes to the Budget framework paper, all of which MPs said the ministry ignored.

On gender and equity compliance, Parliament noted that “the country lacks baseline compliance indicators upon which gender and equity compliance can be premised,” recommending “a baseline study which will guide future Budget framework papers on gender and equity compliance”.
In a set of responses submitted on Wednesday, the ministry replied that “the country actually has gender equality indicators as stipulated in the National Priority Gender Equality Indicator reports”.
Parliament noted that the Public Finance Management Act 2015 requires the Budget framework paper to indicate, among others, “average and year end Gross Domestic Product, average and year end rate of inflation, rate of employment and unemployment” for each closing financial year.

In his response, the Finance minister represented by Mr Bahati said while government acknowledges the provisions of the law, “report on variables such as employment, interest rates and money supply” could not be obtained by the ministry because it has “encountered challenges obtaining data on these variables because of the uniqueness of the data involved”.
The centrality of Parliament in the budgeting process needs not to be debated, but Parliament should realise that the Constitution places them in-charge of the process.
A Budget that is in tandem with and truly reflects the aspirations of citizens is squarely their responsibility.
They will have to act brave this time and use their appropriation discretion to prevail upon the Finance ministry.
East or west, the buck on the Budget stops with Parliament, period.

Tax exemptions
Mr Bahati presented a list of more than 22 private companies that are to continue benefiting from the controversial tax incentives by government, attracting a furious response from members of Parliament’s Budget Committee.
Apart from the minister and his officials, all Members of Parliament in the Committee took exceptions to the move.
“Parliament has always been unhappy with the issue of tax incentives and tax expenditure on behalf of companies, the minister will give his justifications and we (Parliament) shall take a position,” said Richard Othieno, the West Budama North MP.
That most of the companies that will partake of the Shs23 billion tax incentives are foreign-owned generated a new debate altogether.

“Why should government give tax incentives to Aya, yet he constructed the hotel (Hilton) on public land given to him free of charge, government guaranteed his loans and we do not see how the facility is helping Ugandans,” he said.
Speaker after speaker then denounced the move, with Fort Portal Municipality’s Alex Ruhunda saying: “These companies benefit from these incentives and later relocate or even sell off their interests in these companies, leaving tax payers at a loss”.
Committee chairperson Lugoloobi made a case for local investors, saying such incentives should ideally be extended as a form of affirmative action to struggling, local companies.

Questions of the legality of the incentives were particularly raised by Dokolo Woman MP Cecilia Ogwal, asking whether the process “is backed by any law”.
Mr Bahati, in a statement read to the Budget Committee, poured cold water on queries of the process’ legality.
“Parliament through enactment of the various tax laws abolished discretionary powers of the minister or any other person to grant exemptions, instead the incentives are embedded in the respective tax laws,” he said.
He said through the Appropriations Act, the incentives are “embedded” in the Finance ministry’s budget where payments in taxes on behalf of the selected private companies are directly transmitted to the Uganda Revenue Authority.

“For the next Financial Year, it is captured in vote number 8,” said Mr Bahati, brandishing a copy of the ministry’s policy statement, reflecting the proposed pay.
Whereas MPs unanimously objected to the proposed payments, it should be understood that all the enlisted private companies have been benefitting since previous financial years.
Take Roofing Rolling Mills limited, for example, its Corporation Tax has been incentivised by government since June 1, 2009, subject to annual renewal by Parliament of course.
Steel and Tube Industries Limited has been benefitting from the tax incentives from January 1, 2011, and will do so until January 1, 2021, again subject to renewal by Parliament.

The standard reason for the incentives is to boost the respective industry where the incentives are made.
For the steel companies, for instance, government said it is done “to support the steel industry,” a reason MPs must rigorously interrogate.
The question on the lips of many is; who qualifies for the incentives? The Corporation Tax is a levy placed on profits. Why can’t the companies, most of which are established on free land like Hilton Hotel, not pay taxes on their profits?
The final decision, again, is for Parliament to make and May 31 is not far when it will be clear which decision the legislators will have taken.