Parliament scraps 18% tax on water
Minister Kiwanuka. Protested against tax cut in Parliament yesterday but failed to persuade MPs.
MPs last evening passed a bi-partisan motion, scrapping the Value Added Tax imposed on water for consumption, and slapped taxes on gaming, betting and games of chance including casinos, as a potential source of revenue.
Finance Committee Chairperson Frank Tumwebaze moved the amendment to the Value Added Tax (Amendments) Bill 2011, targeting basic water for consumption supplied for domestic use, as a radical measure to increase access to clean water in the country.
The government, through Uganda Revenue Authority (URA), has been charging people 18 per cent in VAT on piped water, a move the lawmakers said has over the years hindered access to clean water, particularly in rural areas.
Trying to stop Parliament from scrapping taxes on piped water, Finance Minister Maria Kiwanuka said government would lose at least Shs14 billion in revenue.
Highly subsidised
“The water sector is highly subsidised by government. If we remove VAT on piped water, we are going to lose revenue, yet such a measure will not reduce the cost of water. National Water charges about Shs35 per 20-litre jerrycan and the people who sell water are the ones who over-charge consumers at Shs150 per 20-litre jerrycan.”
She added: “Supply of piped water is the problem and we must increase the supply of clean water.”
However, the lawmakers could not take any of the minister’s explanation. When the deputy speaker put the matter to a vote, all the members voted to scrap taxes on water.
The lawmakers, led by Mr Nandala Mafabi, also put Ms Kiwanuka on notice over an impending motion to scrap VAT on electricity, as another radical measure to ease the cost of power in the country.
Mr Tumwebaze said gaming has increasingly become lucrative, and urged government to look at the gambling sector as a potential source of increased revenue at a rate of 18 per cent VAT.
