Kasaija tax-laden Budget and endless KCCA drama

Finance minister Matia Kasaija (L) has tabled Finance Bills containing a cocktail of taxes the business community called “a recipe for disaster” and requested Parliament to block some of the proposed revenue measures. PHOTO BY GEOFFREY SSERUYANGE

What you need to know:

Defeats purpose. Although it’s the responsibility of every citizen to pay taxes so as to enable the government to deliver services, attempts to squeeze the poor against the wall, defeats the whole purpose of taxation

With the general elections approaching, Mr Matia Kasaija, the new Finance minister, used his maiden Budget statement to Parliament- the 2015/16 Budget Framework Paper, to unveil an ambitious agenda for economic recovery and to make it clear to the 34.9 million Ugandans that there will be no meaningful tax relief to hard-pressed voters heading to the polls in February next year.

Last week, Mr Kasaija tabled Finance Bills containing a cocktail of taxes the business community called “a recipe for disaster” and requested Parliament to block some of the unfavourable proposed revenue measures.

To finance the Shs18.3 trillion Budget, the minister proposed new taxes on fuel, commuter taxis, beer, cigarettes, chewing gum, sweets and chocolates in his maiden Budget. The good news is that all these taxes are subject to parliamentary approval.

So the MPs must critically examine the impact of each of these tax proposals in the new Budget to help Mr Kasaija broaden the tax base without necessarily balancing the books on the back of the poor.

Failure to fix the gaps in the Budget, the heavy tax on fuel will definitely increase the cost of production and will certainly have a ripple effect. Ultimately, dealers will be forced to increase the prices of goods and the purchasing power (ability to buy) of the poor consumers will be eroded.

Although it’s the responsibility of every citizen to pay taxes so as to enable the government to deliver services, attempts to squeeze the poor against the wall, defeats the whole purpose of taxation.

It’s true taxes pay for the infrastructure of our communities—and when taxes are cut, so are those systems that support our society— but it’s also important to note that announcing tax measures without increased funding to the agriculture sector, the spine of the country’s economy, the minister is basically trying to “deepen” the tax base.

When Daily Monitor broke the story on Wednesday, the proposed taxes sparked ferocious anger on social media and one of the online readers of this newspaper labelled the Finance minister “Ma-tear”. This was in reference to the ominous taxes in his spending plan.

Although the minister has proposed to increase salaries for lecturers and double allowances for the politicians, he cut spending to education, health and agriculture at a time when Uganda’s Shilling is at its weakest against the dollar.
For more than two months now, the Uganda Shilling is stuck in the muck. At almost Shs3,000 per one US dollar, the Shilling is clearly one of the worst performing currencies in the world. Exchanges rates are inherently impulsive; but not to the level of the Shilling.
Ugandans, particularly importers and the low-income traders are feeling the pinch.
As the Deputy Governor, Dr Luis Kasekende, explained, Uganda’s balance of payments has weakened because most of the major sources of foreign exchange for Uganda - exports, workers’ remittances and foreign direct investment – are growing at a slow rate because of the stagnation in the industrialised economies of the world.
This is where Ugandans would like Parliament to speak with one voice- helping the government fix the economy without hurting the poor.

KCCA budget drama
For the last three years, the Opposition have unwaveringly opposed the budget for Kampala Capital City Authority, citing the governance issues at City Hall. First, they questioned the apparent lack of accountability, later they questioned a budget drafted without the in-put of the political leadership.

This was at the climax of a contest between a hand-picked executive director and an elected Lord Mayor. The disputed impeachment of Lord Mayor Erias Lukwago and the glaring holes in the current KCCA law made matters worse.

After Mr Lukwago was hounded out of office in November 2013, a former minister told me that the drama at City Hall was the culmination of a drawn-out combination of political and judicial/legal manoeuvring of a kind Kampala has not experienced in a long time.

He also expressed concerns that the drama was hurting service delivery and accountability and at the same time breeding impunity. His view was that it was also the culmination of Parliament’s failure to take a leadership role in addressing the governance issues MPs created in the hurriedly passing of the KCCA Act in 2010.

Reared ugly head
On Wednesday, the same matter reared its ugly head again. The Leader of Opposition in Parliament, Mr Wafula Oguttu, attempted to block the tabling of KCCA Policy Statement.

He reminded Speaker Rebecca Kadaga about the decision of her deputy Jacob Oulanyah not to handle any matter regarding KCCA until governance issues have been resolved.

But before she allowed the tabling of KCCA budget, the Speaker after reading Oulanyah’s decision guided:

“The issue the Deputy Speaker was talking about was his personal decision not to preside over any matter on KCCA until the issues of governance were resolved. I want us to be realistic-what if the [pending KCCA] Bill was brought for First Reading today, will he then say we shall not consider it. Where else would we have the Bill done other than this House? The Deputy Speaker said in his own words, in his own name. He said Jacob Oulanyah will not preside over KCCA issues.”

What Oulanyah said
For the record, this is the edited version of what Oulanyah said on Friday, December 19, 2014: “…this issue of KCCA has posed a difficult situation in this House not only once, but many times and for some reason it happens when I am in the chair.

It is not a good situation to chair when outstanding matters that are easy to solve continue to be a problem and pose a threat to the progress of debate in the House.

I had earlier made a directive to the government side that this matter of KCCA should be resolved so that when matters come from KCCA we are able to, in a bipartisan manner, handle them expeditiously.”

“Today, I will state again that personally, – and this is for the record - if these matters of governance in KCCA are not resolved with finality, I will not be prepared to preside over a matter involving KCCA again.

This is because it is a stressful experience, there are legitimate concerns being raised and these concerns are genuine. We requested that the matters be resolved and they are not. Each time I sit here, I get headaches about these matters...”