Civil Society Organizations’ (CSOs) appeal to Parliament to increase tax on non-alcoholic drinks attracted mixed reactions from the public saying that the move is likely to cripple business and also hike prices. The public’s urge is that once the taxes are raised people will get out of business as they will only work for government and that also the final consumer of the high taxed product will be the most victim of the increased tax.
CSOs under their umbrella Tax Justice Alliance Uganda (TJA-U) demand that the Shs200 per litre tax is maintained or even increased saying that the reduction in tax will lead to tremendous loss in government revenue.
The CSOs included SEATINI-Uganda, Uganda Debt Network, Transparency International, Civil Society Budget Advocacy Group (CSBAG), Forum for Women in Democracy, Oxfam among others.
According to SEATINI-Uganda Programs Officer, Regina Navuga says that increased consumption of non-alcoholic drinks could negatively affect the health of the consumers.
Meanwhile, the CSOs supported the government proposal to compel landlords and companies with more than one property to declare income from each asset separately saying that it will increase revenue collection.
The TJA-U also appealed to MPs to approve the government proposal to tax businesses that have been making losses for seven consecutive years.
Government proposes an amendment to Section 38 of the Income Tax Act by inserting a new subsection requiring a taxpayer who has carried forward assessed losses for a consecutive period of seven years of income to pay a rate of 0.5% tax on gross turnover for the period after seven years.
Despite their support for this proposed tax, the CSOs want the period to be reduced from seven years to only five years. Navuga told the committee that losses are not necessarily business losses saying that some of the companies make profits but because of the many statutory deductions and abuse of privileges, they reduce chargeable income to negative.
She also noted that no one starts a business to make losses and for a business to persist for seven years, it should be able to pay taxes to build the economy.
The CSOs also appealed to government to develop a mechanism to verify losses by businesses through audit to prevent perpetual declaration of losses.
According to the Excise Duty (Amendment) Bill presented before the Finance Committee on Thursday, government seeks to reduce the excise duty on non-alcoholic beverages from the current 12% or Shs 200 per litre to 11% or Shs185 per litre in the FY2019/2020.
This is among a number of new tax measures formally presented to MPs by State Minister for Finance in-charge of Planning David Bahati. Bahati argues that the reduction is a move by government to implement its commitment to the industry from FY2016/2017 to stimulate growth in production industry.
Under the new tax measures, government seeks to collect Shs860bn. According to documents presented to the committee, government is to lose Shs10bn with the reduction in tax on non-alcoholic drinks.
Ntenjeru North MP, Amos Lugoloobi said that the tax policies should not affect citizens engaged in business but rather encourage more people start up business and build the economy.
Lugoloobi who doubles as the Budget Committee Chairperson cited a need for the proposed measures to be scrutinized not to constrain businesses but help them survive. The Chairperson of Finance committee said that his committee will scrutinize the proposals and come up with recommendations to parliament. For comments, call or text us on 0752510225.
