Parliament scraps tax on kerosene
State Minister for Planning Matia Kasaija leaves Parliament after MPs rejected the government tax proposal on Kerosene . Photo by Geoffrey Sseruyange
What you need to know:
MPs from the Opposition and the ruling party unite to kick out the government proposal.
Parliament- Parliament has rejected the proposed tax on paraffin and accused the government of being ‘oblivious to the needs of low-income earners,’ especially in the countryside.
Parliament, however, maintained the increase of excise duty of Shs50 on petrol and diesel to increase revenue collections. This measure is expected to raise an additional Shs60 billion to help the government finance 81.8 per cent of the budget.
Shadow finance minister Geoffrey Ekanya presented a minority report, rejecting the proposed return of excise duty of Shs200 on Kerosene and accused the government of being insensitive to the poor communities.
While some MPs such as Mr Tim Lwanga (Kyamuswa) and Ms Rose Akol (Bukedea) wanted the tax on paraffin to stay, other legislators, including NRM MPs, supported Mr Ekanya’s position and voted to scrap the new tax.
“The price for paraffin is already high; the proposed tax on paraffin is going to make matters worse especially, in some parts of the country where doctors perform operations on kerosene lamps and in rural areas, where millions of children use kerosene lamps to read and to do their homework,” Mr Ekanya said on Friday.
This means that the price for kerosene which was increased in July this year, when the new taxes in the 2014/15 Budget became effective, will now be reduced by Shs200 per litre and the government will automatically lose the expected revenue of more than Shs15 billion.
State Minister for Planning Matia Kasaija tried to save the tax on paraffin but failed. The minister and some legislators had warned that the decision to scrap paraffin tax would widen the budget deficit and increase borrowing while at the same time force government to cut on its spending on social services.
The minister appealed to the dealers to reduce the price of kerosene.
MPs TARGET MORE TAXES
MPs have also vowed to scrap the proposed tax on agricultural in-puts (supply of seeds, fertilizers, pesticides and hoes) and the proposed income tax on private schools.
Today, the House convenes again to consider the Income Tax Amendments Bill, 2014, Stamps Bill, 2014; VAT (Amendment) Bill, 2014; and Excise Duty Bill, 2013. Under the Income Tax amendments, the government wants to terminate exemption on income derived from educational institutions but the MPs have vowed to block this tax.
