NRM proposes new taxes on fuel, sugar

The Constitution gives the President the mandate to draft and present a national budget annually. This function is carried out in coordination with the finance minister, through a series of consultations

Thursday March 13 2014

Shs200 per litre of kerosene , Shs50 on diesel

Shs200 per litre of kerosene , Shs50 on diesel and petrol 

By Isaac Imaka & Mercy Nalugo


You will have to dig deeper into your pockets to buy processed milk, locally produced chocolate, sweets, chewing gum, computers, car fuel, paraffin and wigs if new taxes proposed by a ruling party advisory committee on the budget are approved, it emerged yesterday.

The proposals are contained in a report by the presidential advisory committee to be discussed in Cabinet early next week, according to sources.

The report dated March 11, a copy of which the Daily Monitor has seen, also proposes to introduce a tax on private schools and tertiary institutions, a 3 per cent stamp duty on sale of land and building, a 1.5 per cent railway development levy and the revival of the Co-operative Bank.

On the restoration of Co-operative Bank, the report asks Cabinet to make a policy decision to appropriate Shs28 billion to the cause.

Bank of Uganda closed the Co-operative Bank on May 19, 1999. In March 2006, the deputy governor at BoU told the bank’s creditors that their bank was closed on account of insolvency occasioned by imprudent practices.

One of the members on the advisory committee, who spoke on condition of anonymity because they are not the official spokesperson of the team, said the rationale for the tax proposals is to help government plug the gaps brought about by the aid cuts by donors.

Yesterday, Mr Jim Mugunga, the spokesperson at the ministry of finance, said the government is “aware of” what has been proposed.

“The ministry has been part of the consultations... Government commenced a budget-making process which is widely consultative. The issue of the presidential advisory committee is one such process. So many proposals come through such processes but not all of them go through.

Every Ugandan has a right to make proposals during budget process and what the MPs are doing is not any different,” he said.

Mr Mugunga, however, said he “cannot tie the proposals to the aid cuts,” noting instead that “I will say it is part of the ongoing budget process.”
Commenting about the tax proposals, Ms Cissy Kagaba, the Anti-Corruption Executive Director summed them up as “self-enriching”.

“The proposals are unfortunate and we would not have had them if we could see value addition but all this money being collected shall end up in the pockets of a few,” she said yesterday.

The Presidential Advisory Committee on the Budget is an entity that was formed in February last year during an NRM parliamentary caucus retreat in Kyankwazi with an informal mandate to research, and come up with budget proposals in line with the party manifesto.

According to its structure, this body is chaired by the President but its meetings are led by Mr Tim Lwanga, who is also the chairman of the parliamentary committee on Budget. If adopted by cabinet, the committee proposals could be included in the 2014/15 budget which will be read in July.
When contacted, Mr Lwanga, who was driving from Jinja, refused to comment.
“Where did you get that information?” he asked. “Someone has given you a document which is not fully pegged and for a person of my position I cannot comment on it without seeing what you have.”

He added, “Be careful about what people give because some can just print a document and give it to you.”
Justifying the imposition of VAT on the supply of processed milk, the committee says in the report that it seeks to increase revenue from the agricultural sector and remove revenue loss as a result of refunds made to milk processors and suppliers.

“The committee recommended this revenue measure arguing that the number of persons consuming processed milk and milk products is small compared to the general population as a whole,” the report reads.

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