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DANIEL KAWUMA: Analyzing Recent Ugandan Legislation, A Concerning Shift Towards Government Expansion

Kelvin Patrice by Kelvin Patrice
2 years ago
in Op-Ed, Politics
1 1
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In a recent flurry of legislative activity, the NRM-majority Parliament of Uganda, under the Museveni regime, has passed a series of bills purportedly aimed at enhancing various aspects of the country’s economic and administrative framework. However, a closer examination reveals a troubling trend that goes against the interests of the Ugandan people, contradicts pro-business principles and represents an alarming expansion of governmental control.

One such piece of legislation is the Foreign Exchange (Amendment) Act 2023, which mandates a substantial increase in the minimum paid-up share capital required to engage in money remittance and foreign exchange businesses. While these changes are positioned as measures to bolster financial stability, they come at the cost of stifling entrepreneurship and limiting market entry. By arbitrarily raising the capital barrier, the government risks preventing smaller businesses from participating in these crucial sectors, ultimately reducing competition and innovation.

Furthermore, the increase in capital requirements may be seen as a veiled strategy for over-taxation. This move appears to be more about generating government revenue than promoting business growth. By setting a higher entry threshold, the government can justify imposing higher taxes on a smaller pool of businesses, potentially burdening them with additional financial strain.

The most concerning aspect of these legislative changes is their cumulative impact. The bills signed into law signal an alarming shift towards the government’s overreach into various sectors, including finance and technology. The increased regulation imposed by the Value Added Tax (Amendment) No.2 Act 2023 and the Income Tax (Amendment) Act 2023 undermines the flexibility and adaptability that are crucial for fostering a dynamic business environment.

In a move that raises eyebrows internationally, the Income Tax (Amendment) Act 2023 imposes a 5% withholding tax levy on the gross revenue earned by social media giants like X (formerly Twitter), Facebook, Netflix, and Amazon within Uganda. While the objective might be to capture revenue from foreign companies operating within the country, this approach could have unintended consequences. It could lead to these companies passing on the additional tax burden to consumers, effectively taxing ordinary Ugandans for using these services.

Another baffling decision is the extension of a tax holiday for Bujagali Electricity Limited under the Income Tax (Amendment) Act 2023. The company’s tax holiday has already spanned over 15 years, and this latest extension is projected to cost the country a staggering Shs95.6 billion in foregone revenue. This move raises legitimate concerns about the fairness of such arrangements, especially when essential public services need funding.

While some of these bills might have been presented with noble intentions, they collectively paint a picture of a government expanding its grip on the economy and people’s lives. The increase in regulatory burdens, arbitrary capital requirements, and the introduction of new taxes do not align with the principles of a pro-business environment that fosters innovation, entrepreneurship, and job creation. Rather than cultivating economic growth, these legislative changes risk stifling it and relegating Uganda’s businesses and citizens to a cycle of overregulation and dependency on government decisions.

As engaged citizens, it is crucial to critically assess the long-term implications of these legislative actions and advocate for policies that genuinely promote economic prosperity, business growth, and the well-being of all Ugandans.

#UgandaLegislationAnalysis #EconomicFreedom #InnovationMatters

Dr. Daniel Kawuma is the
National Unity Platform Diaspora Team Leader


Do you have a story in your community or an opinion to share with us: Email us at editorial@watchdoguganda.com
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