Ramathan Ggoobi, a top Economist and Policy Analyst has warned that the new taxes that are intended to be introduced in Uganda could be harmful to the country’s economy.
Last week, the Minister of Finance Matia Kasaija tabled before parliament 12 tax-related bills under which government proposes several budget measures for the coming financial year 2021/2022.
Among the tax proposals the minister tabled include; the Excise Duty (Amendment) Bill, 2021, The Fish (Amendment) Bill, 2021, The External Trade (Amendment) Bill, 2021, The Income Tax (Amendment) Bill, 2021, The Mining (Amendment) Bill, 2021, The Stamp Duty (Amendment) Bill, 2021 among others.
Income Tax Under the Income Tax (Amendment) Bill, 2021, proposes that landlords earning rental income from more than one rental property, account for the income and expenses on each property separately.
This proposal compels landlords and companies with more than one property to declare the income from each asset separately was in 2019 rejected by Parliament.
External Trade (Amendment) Bill, 2021 Government proposes a levy of US Dollars 0.4 per Kilogram to be charged on wheat bran, cotton cake, maize bran and other by-products of the milling industry exported out of Uganda under the External Trade (Amendment) Bill. The levy if approved will be paid by exporters to Uganda Revenue Authority (URA) at the customs point.
Traffic and Road Safety (Amendment) Bill, 2021 Government proposes under the Traffic and Road Safety (Amendment) Bill, 2021 that effective 1st July 2021, a person owning a motor vehicle, trailer or engineering plant will use it on the road only if it’s licensed under the Traffic and Road Safety Act.
However, during an interview with NBS TV on Monday, Ggoobi said that it seems the government has run out of options since it’s under pressure to raise domestic revenue and reduce borrowing.
The Makerere University Business School Don added the target of introducing the new taxes is to increase domestic revenue however, the approach could leave economy negatively affected.
“In the 90s when the government faced this pressure they responded through fiscal discipline. Now they are responding differently. We all need to pay taxes so we can run our economy but as we pay these taxes we need to realize we are as hard-hit as the government is.”
He urged that while the economy is growing, it is always the right time to tax but since the government itself is telling Ugandans that currently, the economy is shrinking, it was a poor move because each tax has a negative multiplier effect.
“The government is getting to the wall, a few years ago you used to hear conversations of we have the money. Now, even the money is a problem. It’s good that agencies are going to be rationalized but we have to look at the whole government. Do we need all these districts? Do we need all these ministries? Uganda as a country is under-taxed, only that it’s overtaxing a particular group of people and if everyone pays little no one would be paying more. But now there’s mistrust in the public about the government taxing them,” Ggoobi said.
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