What you need to know:
Uganda is lagging behind its neighbours in tax collection, according to officials
Numerous tax proposals and exemptions that were announced in the Budget speech will be enforced irrespective of civil society and business association leaders’ complaints, government officials have said.
There are efforts underway to have some of the tax proposals, especially the one on agricultural inputs, fuel, water, computers and bank charges, suspended as discussion around it takes shape.
“We have an obligation to provide social services and the only way we can be able to do that is through taxes. And those proposals should be supported by the public because that is the only way we can collect enough money to do all the things we are supposed to do,” the assistant commissioner tax policy department at the Ministry of Finance, Mr Moses Ogwapus, said yesterday.
For purposes of equity and fairness, Mr Ogwapus said economic sectors whose exemptions have been withdrawn will by all means be subjected to the same compliance rule as others who have been remitting their taxes before them.
Speaking at the Uganda Media Centre yesterday, the Uganda Revenue Authority acting commissioner domestic taxes, Mr John Mayanja, said: “In the region, we (Uganda) are yet to collect as much taxes as our neighbours and to do that, we must increase our tax base (sources of more revenue collection).”
He continued: “This means that we have to do away with exemptions and have sectors like agriculture and education, among other sectors, to also contribute in terms of taxes. “This means that we will ensure that all areas that have been exempted or zero rated pay its taxes just like the other areas.”
According to Mr Mayanja and Mr Ogwapus, traders, transporters, manufacturers, and commercial farmers have no reason to increase prices of commodities and services they render given that the introduced taxes and reclaimed exemptions have minimal or no impact at all on their operations.
“This is a liberalised economy, meaning we have no control over prices but there is no relationship between a school increasing the fees and the tax we have imposed on the profit that the school has made,” Mr Ogwapus said.
This also means that transporters, wholesalers and retailers have no excuse to raise their prices because they will equally remain unaffected despite numerous tax proposals and removal of several exemptions on basic commodities and services.
In an earlier interview with Daily Monitor, Finance Minister Maria Kiwanuka said: “We do not expect to see increases on kerosene or even sugar. If anything happens, do not blame it on the Budget.”
She continued: “Blame the increases on the unscrupulous traders (and business people). What does an increase of Shs25 on sugar have to do with raising prices of the commodity?”
TAX PROPOSALS AND WHY THEY ARE NO JUSTIFICATIONS FOR PRICE INCREASES
In the recent Budget speech, Finance minister Maria Kiwanuka instituted several tax measures including a Shs50 increase on excise duty on petrol and diesel, reinstatement of the Shs200 excise duty on kerosene, increase on excise duty on sugar by Shs25 per kilogramme, introduction of excise duty on bank charges and money transfer fees and introduction of 10 percent excise duty on mobile money withdraw fees, let alone levy on agricultural inputs.
In an earlier interview, Mr Francis Kamulegeya, a tax expert and the Country Senior Partner for PwC, said most of the proposed taxes and reclaimed exemptions should not be the basis for the business community to rush to increase prices of goods and services.