Fallacies in Uganda’s Tax Policy Criticised

The assertion that increasing indirect taxes will help in widening the narrow tax base by establishing taxes on basic food items is a fallacy, Kigo Thinkers [KT] have said.

While addressing journalists recently at Shanghai restaurant in Kampala, Oskar Musoke, a founding member of Kigo Thinkers, said increasing indirect taxes will not widen the tax base.

“The common belief is that government has the powers to decide and the citizens are resigned to government telling them what to do,” he said, adding: “It should, therefore, be contested whether government ever makes laws or policies with the citizens as the primary beneficiary.”

Musoke cited government’s policy of taxing the citizens to keep the status quo as opposed to taxing them to bring about social transformation. He said such contentions should raise the question of good governance in the country.

In the 20142015 national budget, government terminated exemptions on agro-inputs. Exemptions on interest income earned from credit to agriculture were also scrapped. More than three quarters of Ugandans depend on agriculture for a living. Kigo Thinkers suggest that the government should seek ways of taxing the products from agriculture rather than agro-inputs, which can push farmers out of business.

Musoke said it would be better to “Reduce the cost of business so that people can produce more, and then you [government] tax that production.”

Dr Ian Clarke, the chairman and CEO International Medical Group, agrees with the Kigo Thinkers, when they say that many Ugandans do not see value for money for the taxes they pay.

“About 70 per cent of Uganda’s population works in agriculture, and less than 400 people work in parliament. Taxes are supposed to cater for the interests of the whole nation, but we can see that while all men are equal, some are more equal than others,” his statement reads in part.

Source : The Observer

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