Legislators scrap tax on paraffin
A man puts paraffin in a candle. File photo
What you need to know:
The MPs rejected the tax on this basic necessity, arguing that ordinary Ugandans cannot afford it. They advised the government to raise money from other ventures.
Lawmakers yesterday scrapped the controversial tax on kerosene but maintained other taxes on fuel, water, cigarettes, wheat and spirits.
Parliament yesterday passed the Excise Tariff (Amendment) Bill and the Value Added Tax (Amendment) Bill where the House overwhelmingly rejected the restoration of a Shs200 excise duty on each litre of kerosene. The Minister of State for Finance (General Duties), Fred Omach, was forced to withdraw the government’s proposed tax on kerosene.
Motion moved
Ms Betty Amongi (Oyam South) moved an amendment to have the tax scrapped and was overwhelmingly supported. State Minister for Finance (Investiments) Aston Kajara’s defence that the Shs15billion raised from the tax would raise revenue and that the proposal is already operational fell on the rocks and crashed when the MPs flatly rejected it.
The Finance Committee had recommended in their report to Parliament that government should expand coverage of stand pipes to areas where there are piped water schemes and that direct access to clean water will eliminate the middlemen from the chain and make water cheap for all consumers.
Minister Omach later succumbed to the MPs’ resistance and suggested that the Shs15billion would be recovered from incoming international calls services whose charges remained at $0.09 per minute.
Other taxes to stay
Under the passed Value Added Tax Amendment Bill 2013, Parliament upheld VAT on water after Ms Amongi’s motion to have the clause deleted was defeated.
Whereas the legislators reasoned that VAT on water for domestic use would expose Ugandans to unsafe water, government maintained that the measure would fetch Shs8 billion in revenue.
The legislators also put up a spirited fight against taxing wheat, arguing that it is a food item like maize but government explained that the levy is on imported wheat.
Other taxes that were maintained include VAT on hotel accommodation and VAT on supply of goods and services. The legislators also maintained the excise duty of Shs50 on petrol and diesel with a view of increasing revenue collections. About Shs72 billion is expected to be realised.
They also increased excise duty on cigarettes from Shs22,000, Shs25,000 and Shs55,000 for Soft Cup (whose local content is more than 70 per centof its ingredients), other Soft Cup and Hinge Lid respectively by 50 per cent. The excise duty on gambling was also maintained at 20 per cent on revenue from activities akin to gambling in order to expand the tax base. This measure is expected to generate about Shs8 billion.
