How Kasaija’s Budget will strangle the masses

The President, in the changes at the Finance ministry, made a big fashion statement. He moved Maria Kiwanuka from the big chair to a specialised seat in charge of talking to her former employers in Washington DC. In her place, he dusted up an old cadre, Matia Kasaija, who spent donkey years in shadow briefs – first at the NRM Secretariat before he won election to Parliament in Bunyoro. Kasaija spent nearly a decade as an understudy to Dr Ezra Suruma at the now defunct NRM Secretariat as deputy director for economic affairs. In Kasaija’s place, he placed a youthful MP, David Bahati, who carries a mixed profile as a mobiliser and a no-so-savoury background fending off lenders who claim he owes them money.

So far, the minister has come to Parliament with a raft of new taxing measures. He will tax more and obviously spend more. The mandarins at the Ministry of Finance seem to have given up on broad-based taxation measures limited by the performance of the economy. The most democratic tax – the income tax – cannot grow because employment numbers remain stunted. Uganda’s population pyramid has millions more in the youth and the youth have been shut out of the formal employment market. Uganda Bureau of Statistics reports that more than 80 per cent of the 18-24 year-olds are unemployed.

Very few farmers are anywhere close to the annual PAYE threshold. Land shortage is increasing pressure in the rich agricultural hinterland. Kabale is now joined by central and west Ankole. We have just been treated to a spectacle of land politics in northern Uganda where two Cabinet ministers had to face the nudity of a population over land issues.
At this point, it is useful to see how some of the Budget measures enacted last year have performed. New taxes on agro-inputs – they are now subject to VAT – have raised prices. This change came without warning and is already causing havoc. Contraband, defective inputs have washed up the market. Uganda does not have a large chemical industry so most agro-inputs arrive in semi-processed form. Our industries simply dilute them and bottle them. Smart traders are now diluting these further with disastrous effects on the farms. In 2010, a pair of rubber gum boots produced by Kenya Bata went for Shs18,000. Kenya Bata’s landed cost is probably the same but it has been swept upmarket by taxes you will be lucky to get the same pair for less than Shs28,000.

In its place, you still get a pair of gum boots at the same price but at a deleterious cost. The new placeholder from China will last only a few weeks before giving way.
In the animal feeds industry, the same truth obtains. Inflation is pushing up the costs of feeds. Maize bran has been rising in 2015 from a base price of Shs500 last year to Shs650-700. It is likely to strike Shs900 soon, wreaking havoc on guilds of farmers who rushed to get free poultry and livestock.

The President wants produce moving on his shiny roads to the markets but seems constrained by a budgetary policy that is heavy on politics and low on accountability. Kasaija’s affable personality seems to suggest everyone will get something from the high table. That good policies will “trickle” down to the masses. But the tax-man may have strangled the masses before this trickle down has any positive effect.
The banks are struggling to balance their books. The utility distributor Umeme created a new engineering first this rainy season when poles began falling over each other after highly publicised revamping of creaky power lines. It always seems that it’s the game of cards that has to continue at all costs.
Mr Ssemogerere is an Attorney-at-Law and an Aocate. kssemoge@gmail.com

SOURCE: Daily Monitor

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