Parliament scraps Excise Duty on confectionaries, sweets

MPs have passed the Excise Duty (Amendment) Bill, 2022 scrapping taxes on sugar confectionaries, sweets, gums, and chocolates.

The bill was earlier passed in March 2022 but returned to Parliament for reconsideration by President Yoweri Museveni.

The Parliament Committee on Finance, Planning and Economic Development reconsidered the bill and presented it before the House during plenary on Tuesday, 30 August 2022.

The President asked Parliament to reconsider its decision to introduce an excise duty of 20 per cent on sugar confectionaries, gums, chocolates, and sweets against the government decision not to do so in the current financial year.

Museveni was concerned that the decision was detrimental to local manufacturers because their products were being outcompeted by imported low quality products and that the move was further working against government’s initiative to allow for the economy to recover from the devastating effects of COVID-19.

The President also disagreed with Parliament on rejecting the new targeted excise duty of 40 per cent or Shs4,000 per kilogramme charge from the 2.5 per cent or Shs266 per kilogramme of plastics and plastic granules.

Parliament was not convinced by the rationale of waiving tax from the majority 93 per cent and then slamming it on a minority seven per cent. It was further not convinced by how the ministry reached the tax figures for the disproportionate tax that is being proposed.

The President on the other hand said Parliament’s decision undermines the objectives government had which were; to streamline taxation of plastic products by refocusing the tax away from sensitive sectors that use elements of plastics, and the challenges around the administration of the previous tax the bill sought to repeal.

On reconsideration of the President’s proposals, the Committee on Finance, Planning and Economic Development conceded the President’s position on doing away with the taxation it had initially proposed on sugar confectionaries and related products.

The committee, however, disagreed with the President on the proposed taxation of plastics on the basis that it was unfair and unrealistically targeted to the minority and further submitted that the proposed tax should be rejected.

Hon. Keefa Kiwanuka, the committee chairperson, said the committee has met with key stakeholders including the Uganda Manufacturers Association, who said that the existing tax had led to several undesirable consequences.

“The proposed tax is, however, arbitrary and would be disastrous to the economy and should therefore be rejected by Parliament,” Kiwanuka added.

Parliament considered the committee recommendations and passed the Bill upholding the President’s proposals to do away with taxation on sugar confectionaries, and on the introduction of targeted tax of Shs4,000 per kilogramme on plastics and plastic granules.

Seven other bills, including the Trustees Incorporation (Amendment) Bill, the Companies (Amendment) Bill, the Insolvency (Amendment) Bill, the Partnerships (Amendment) Bill, the Anti-Terrorism (Amendment) Bill, the Cooperatives Societies (Amendment) Bill and the Anti-Money Laundering (Amendment) Bill.