A Month Later, Kiwanuka Still Defends Her Budget

A month after she read what some described as the ‘tough’ budget, laden with taxes, Finance Minister Maria Kiwanuka has defended her proposals, and urged Ugandans to embrace what she calls a “fair” budget.

Speaking at the official closure of the Uganda Investment Climate Programme (UICP) at Sheraton hotel last week, Kiwanuka said the proposed taxes were not intended to discourage Ugandans from work or widen the gap between the rich and the poor. They are to facilitate economic growth, she said.

“Income tax is a tax on profits after all the operational costs have been deducted,” Kiwanuka said, in a response to private school owners, who claimed the tax would affect their businesses.

“For the teachers, secretaries, we said let them [contribute] pay as you earn (PAYE). Why should we impose more burden on the few? We want to make sure that those who are able to pay tax, get into the tax net.”

Kiwanuka said Ugandans should be hard on the politicians and ask to see how the money they pay in taxes is being used. She said, often Ugandans have resorted to complaining instead of tasking the implementers of government projects to explain how they used their money.

“Pay taxes and defend them to death. Ask to see what your money has been used for,” she said.

“We must mobilise our own resources to take care of our own programmes.”

In the 201415 budget, Kiwanuka announced numerous taxes, where she targeted basic items such as salt and paraffin. Analysts said it was unfair and would widen income inequality. But Kiwanuka shot back and said Ugandans were doing better than before.

“We have managed to fight absolute poverty to just under 20 per cent [of the population],” she said.

Meanwhile, the private sector used the same forum to fault civil servants and the public sector in general for having frustrated efforts to improve the doing-business environment in the country. Gideon Badagawa, the executive director of Private Sector Foundation Uganda (PSFU), said while they had recommended that 41 business licences be removed for being redundant, the progress has been disappointingly slow.

In fact, Badagawa said, none has been removed with businessmen still bogged down by long processes before they start to trade. UICP was initiated in 2011 by the ministry of Finance in partnership with the World Bank’s funding arm, the IFC, to review and remove all the unnecessary processes that were impending entrepreneurship. IFC is expected to pull out although the ministry of Finance is expected to keep pushing for more reforms.

A statement from the ministry of Finance says the goal of the reforms is to reduce licensing compliance costs to business by 25 per cent, which is estimated to save the private sector Shs 78.3bn. Reforms achieved so far include establishment of a business licensing online portal. Finance also says it has worked with KCCA to decentralize licence issuance, which has reduced days spent to four from 60 days before one could get authority to trade.

Yet Uganda still ranked poorly on the WB’s doing business indicator report, with the country slipping down to the 132nd position this year, from the 126th a year before.

The WB says getting access to reliable electricity, dealing with construction permits, trading across borders, and access to credit, among other issues, are still a nightmare.

However, some believe the annual report is unfair to the country. Allen Asiimwe, the country director for Trade Mark East Africa, one of the firms facilitating trade systems in the country, says some of the reforms like e-cargo tracking, and Asycuuda World were not being captured, which gives a false impression about Uganda.

Source : The Observer

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