Leaders call on MPs, and Ugandans to reject taxes on essential goods

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Leaders call on MPs, and Ugandans to reject taxes on essential goods
Moses Matovu speaking to the media

The National Economic Empowerment Dialogue (NEED) Party leaders have issued a strong plea to all Ugandans and Members of Parliament (MPs), urging them to oppose the proposed budget that includes taxes on essential goods.

These taxes are likely to result in increased prices across the country.

During a media briefing, Moses Matovu, the National Spokesperson for the NEED Party, emphasized the detrimental impact of the new government policies, particularly the budget's provisions imposing taxes on various goods such as fuel, cement, water, paraffin, and land.

He highlighted the disproportionate burden these taxes place on the muntu wawansi "omunkusele," contradicting the government's purported aim of integrating them into the cash economy through initiatives like PDM and Myooga.

Matovu questioned the government's objectives, raising concerns about whether these policies align with perpetuating poverty or fostering genuine advancement.

He also scrutinized the efficacy of tax utilization, citing reports from the office of the IGG that indicate substantial annual losses of approximately 11 trillion Ugandan Shillings due to corruption.

Highlighting instances of mismanagement and embezzlement within the classified budget, Matovu emphasized the need for accountability and efficient utilization of taxpayer funds.

Instead of increasing taxes, he advocated for a shift in focus towards empowering citizens economically, creating employment opportunities, and addressing systemic corruption.

Matovu also urged the government to prioritize unresolved projects like the Lubowa project.

Godfrey Ssetumba, the National Organizing Secretary of the NEED Party, echoed Matovu's sentiments, emphasizing the paradox of Uganda's substantial tax revenue alongside persisting poverty and business failures largely attributed to unsustainable loan-dependent ventures.

He questioned the government's tendency to impose additional taxes, often correlated with pre-election periods, to fund patronage networks. Ssetumba highlighted the urgent need for fiscal transparency and accountability.

Recently, protests erupted among traders in downtown Kampala (Kikuubo), leading them to close their shops in protest against the implementation of the Electronic Fiscal Receipting and Invoicing System (EFRIS). Two individuals were apprehended by the police during these demonstrations.

Traders argue that the introduction of EFRIS, including the use of Electronic Fiscal Devices (EFDs), e-invoicing, and direct communication with business transaction systems, amounts to double taxation. They also claim to struggle with understanding the new automated sales records and levy system.

The proposed taxes on key products such as fuel and building materials in the next financial year have raised fears of an increase in the already high cost of living. The government argues that these proposals are necessary to cover a revenue shortfall as it plans to reduce borrowing.

The proposals, tabled before Parliament by the State Minister of Finance in charge of General Duties, Henry Musasizi, consist of five sets of tax Bills: Excise Duty Amendment Bill 2024, Stamp Duty Amendment Bill 2024, Income Tax Bill 2024, Value Added Tax Bill 2024, and Tax Procedures Amendments Bill 2024.

The proposed taxes include a Ush500 ($0.12) charge on each 50kg bag of cement, adhesive, grout, white cement, or lime. They also seek to introduce a Ush1,550 ($0.39) charge on every litre of gasoline, Ush1,230 ($0.31) on each litre of gas oil, and Ush1,550 ($0.39) on every litre of paraffin.

The government is also proposing new taxes on bottled mineral water, opaque beer, and gains from the sale of land, rental property, and shares of private companies.

These proposals aim to generate Ush1.9 trillion ($488 million) to finance the proposed Ush58.3 trillion ($15 billion) budget for 2024/25, focusing on the monetization of the Ugandan economy through agriculture, industrialization, services expansion, digital transformation, and market access.

Some legislators and tax experts have expressed their discontent with these proposals, arguing that they predominantly affect the poor and expose them to increased living costs. They suggest widening the tax base instead of introducing new taxes.

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