Museveni Angry, New Agricultural Taxes To Be Scrapped

Maria kiwanuka

there order geneva; font-size: small; line-height: 150%;”>Chimpreports has exclusively learnt that the ruling National Resistance Movement Caucus meeting that sat on Monday at State House Nakasero and chaired by President Museveni who is also the party chairman, condemned the new taxes mainly on agricultural inputs and private schools and members asked for their scrapping.

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According to sources who attended the meeting in which all members were asked never to tell any journalist about their deliberations, it was resolved that Cabinet should immediately converge and discuss the new taxes as early as Wednesday.

“We resolved to forward the most critical issue, the new taxes especially on agriculture, to cabinet for them to deliberate and find a way of throwing them out,” said a source who preferred anonymity.

President Museveni amused ministers and NRM Members of Parliament when he angrily said he was not aware of the new taxes.

“It is very sad that some people passed behind me and included those taxes into our budget. This is counterproductive and I Museveni who has been championing the growth of rural income through agriculture across the country cannot again be the one to put those taxes.”

On 12th June 2014 while reading the budget, Maria Kiwanuka said her ministry planned to raise 30 billion from scrapping the tax exemption on agricultural inputs alone and also announced new taxes on private schools and computer related equipments.

Kiwanuka removed all tax exemptions for agriculture chain inputs and slapped an 18 percent Value Added Tax (VAT).

The new taxes however attracted mixed reactions from both ruling NRM members and the opposition members with many vowing not to pass the budget when brought to the floor of Parliament for debate with new taxes included.

From hoes, pangas, acaricides, pesticides, seeds, wheel barrows, milk cans, packaging material etc, farmers were expected to pay more and hope to recover their costs when they put their products to the market through high prices.

Expert speaks out

According to Morrison Rwakakamba Chief Executive Officer, Agency for Transformation – Think and Do tank, few farmers in Uganda make it to output market places, as many are unfortunately still subsistence with unviable surpluses.

“The assumptive argument at the Ministry of Finance that many small holder farmers will not be affected since they don’t engage in inputs markets is at most wayward and diversionary. The argument is also careless and lazy, because it seems to rather celebrate perpetuation of subsistence agriculture in Uganda,” said Rwakakamba in a recent article published by Chimpreports.

Millions of farmers, since they no longer have seed rights expressed through home grain granaries etc. have to buy seed and other implements in open input markets. The inputs traders would have just pass the VAT incidence to farmers.

Rwakakamba argues that 98 percent of these farmers have not rights under our obtaining tax code to claim VAT returns from the Uganda Revenue Authority (URA) since they don’t have a requisite turnover of shs 50 million and above to qualify for VAT tax returns.

“Whereas, paying taxes is a good thing- and equally expanding tax base is a legitimate pursuit of any Nation State, taxing instead of incentivizing agriculture in Uganda’s circumstance is a big mistake. Even when taxing agriculture, it is grave to tax inputs because such undertaking increases initial cost stream and discourages investment in the sector.”


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