MPs tax evasion deal sparks public anger

Left-right: Ms Imelda Namajja, the senior programme officer Uganda Debt Network, Ms Jane Nalungo, the country director SEATINI Uganda, and Mr Patrick Tumwebaze, the executive director Uganda Debt Network address journalists in Kampala yesterday. Photo by Alex Esagala

What you need to know:

Costly. If the Bill is assented to by the President, Ugandans will lose more than Shs41.58b in additional revenue.

Parliament. A decision by legislators to exempt their emoluments from income tax has sparked public outrage with constituents disparaging them as ‘hyenas’.
Civil society organisations (CSOs) are demanding that the president rejects the Income Tax (Amendments) Bill, 2016, in public interest.

Those who monitor public spending say the MPs’ tax deal is unfair at a time when Ugandans are struggling with stagnant wages, biting poverty and widespread unemployment.
If the Bill passed last Thursday is assented to by President Museveni, Ugandans will lose more than Shs41.58b in additional revenue.
This money, according to analysis by Civil Society Budget Advocacy Group (CSBAG), a coalition of CSOs that seeks to influence government decisions on resource mobilisation, can address some of the most pressing needs in health, local government, education and agriculture sector.

Women and men, holding placards that read: “I pay my tax why not you my MP”, “Mr President, do not assent to Income Tax [Amendments] Bill”, “MPs should be exemplary”, “there should be equitable taxation in Uganda” stood by at a news conference addressed jointly by Uganda Debt Network, SEATINI-Uganda, CSBAG, Kampala City Traders Association (KACITA) and concerned citizens.
The chairman Kacita, Mr Everest Kayondo, castigated a bloated Parliament and MPs as “selfish”. Mr Kayondo reminded MPs that traders were concerned because they contribute up to 42 per cent of all taxes collected by Uganda Revenue Authority.
“It’s very dangerous for people in the high income tax bracket to evade taxes and leave the low-income earners to shoulder the burden,” Mr Everest Macondo said.

The executive director UDN, Mr Patrick Tumwebaze, and other CSO leaders called the MPs decision “absurd” and accused Members of Parliament of abusing their powers to nullify the court ruling through the disputed amendment to the proposed Income Tax law.
“Our MPs don’t want to pay taxes yet the country is struggling to look for additional revenue to finance a number of key priorities the 2016/17 budget,” Mr Tumwebaze said.
“We abhor these underhand methods and the insensitivity of our legislators to the plight of their fellow citizens. MPs are supposed to lead by example and to be trustees of the people’s interests. This move is a betrayal of this trust especially given the fact that other taxpayers who earn less are taxed by URA, he added.”

Mr William Nokrach, one of the Parliamentary Commissioners, yesterday accused CSOs of peddling lies that MPs don’t pay taxes. Mr Nockrach defended the amendment to the Income Tax law and insisted that the Commission is currently withholding taxes from MPs pay and that some MPs are paying up to Shs14m per month.
“What’s the definition of selfishness? MPs are paying Shs6m per month. Isn’t that paying taxes? It’s not true that MPs don’t pay taxes. Deductions are going on and we are remitting money to URA even with a lot of demands from the people we represent,” Mr Nokrach asked.
However, URA Assistant Commissioner Public and Corporate Affairs, Ms Sarah Birungi Banage said URA is waiting for the decision of the court on the matter.

“MPs consolidated their pay (allowances and salary) because they wanted to get a big gratuity [after retirement] but you cannot have your cake and eat it too. The moment you consolidate your pay, it becomes a taxable income. For us, we are following the law. Allowances are reimbursable yet income is taxable that’s why URA was only taxing MPs salary and it was not big until they consolidated it,” Ms Birungi said.
Mr Julius Kapwepwe Mishambi, the director of programmes at UDN, Mr Jeff Wadulo, the executive director Jenga Afrika and Ms Jane Nalunga, the country director SEATINI-Uganda put MPs on notice that as CSOs, they can also withhold PAYE as “a symbolism of dissent to greed in parliament”.

“The Speaker needs to speak to Ugandans explaining why the amendments to Income Tax were hurriedly passed. The Bill was obnoxiously passed and the champions (of dissent) like Sarah Opendi (State Minister health) were harassed and silenced.”
“Why are they dodging tax when the taxpayer is going to finance their brand new vehicles and fat salaries? We are appealing to the wisdom of the president to reject the bill in public interest.”

Article 92 of the Constitution puts a restriction on retrospective legislation.
It reads: “Parliament shall not pass any law to alter the decision or judgment of any court as between the parties to the decision or judgment.”
However, it’s not clear whether the decision by parliament will be challenged in Court.
The last Thursday amendment to Income Tax law, coming amid a sluggish economy, was a response to the February 2 ruling of the Commercial Court, ordering the Parliamentary Commission chaired by Speaker Rebecca Kadaga to deduct tax from MPs’ emoluments. The Court had ordered that all taxes owing and due to the government be collected and remitted to URA starting from 2004.

This judgment, however, infuriated MPs after they realised that each will cough up to Shs9m in Pay-as-You- Earn (PAYE). When the MPs approached the Commission, the authorities took a decision to appeal. On February 22, they filed the notice of appeal.
However, before the appeal is heard, lst Thursday night, Mr Henry Musasizi (Rubanda East) moved the disputed amendment to Income Tax law and reasoned that “the employment income of a person employed as an MP, except salary, is a facilitation.”
This means that instead of taxing an MP on his or her consolidated pay of between Shs20m to Shs25m, URA will tax only Shs2.6m per month as salary.

Public fury
Ms Elizabeth Saba, a farmer from Kibuku District in eastern Uganda, wondered why MPs decided to exempt themselves from income tax without consulting their electorate.
“We sent them to Parliament to represent us not themselves,” Ms Saba said. “Now that MPs are saying they don’t want to pay taxes, we should also not pay. Why are they complaining about teachers and health workers’ salaries yet they don’t want to pay taxes, she added.”

Benefits enjoyed by MPs

• Consolidated pay Shs20m or Shs25
• A one-off car grant of Shs130 million
• Monthly gratuity of 30 per cent
• Medical insurance cover
• A furnished office
• A Shs2.6m iPad for each legislator.
• The Commission had proposed tea, lunch and housing allowances
• Mileage facilitation
• Constituency facilitation
• Subsistence allowance of about Shs3 million or more,
• Sitting allowances (committees/ plenary),
• Social security benefits of Shs9 million per month

What Shs41.5b can do

Health. The money can cover the funding gap of Shs36b in the health budget needed to recruit 3,542 health workers. Nyamwegatira Health Centre III in Kanungu District currently receives Shs6.8m per year out of Shs13.4m. The money can fund 6,032 health Centre IIIs in the 2016/17 financial year.
Education. The money can pay a monthly salary of Shs101,878 per primary school teacher.
Labour. Fill the funding gap of Shs1.7 billion required by the industrial court for efficient operations during the 2016/17 financial year.

Agriculture. The newly created directorate of agricultural extension workers needs additional funding of Shs0.928 billion for wage and operational expenses. There is also a funding gap of Shs2b needed to revitalise Cooperatives. Also, Shs35b is needed to kick-start the cooperative bank..
Local Government. This money can finance Napak local governments for the next four years. The total district budget for Napak is Shs11.3billion.