How do you justify the reasoning behind the removal tax exemptions on agriculture?
I am a farmer myself. I think the removal of these incentives is unfortunate. To an ordinary farmer, that will be a big blow because he or she needs a lot of support to be able to get above the poverty line. So I think instead of taxing these ordinary famers, we should instead support them to upgrade to commercial level from subsistence, where majority of famers are. By reinstating the tax, which we fought seriously, you are indirectly saying the prices of inputs should go up.
Reinstating tax on agriculture is likely to kill the smallholder farmers and will raise the cost of farming. So, I think it is not quite a well-thought idea to reinstate tax on agriculture inputs. May be for commercial famers it makes sense because from what they produce they can pay taxes.
To what extent did the exemptions impact on the growth of the sector ever since they were introduced?
Of course many farmers were encouraged to join agriculture because they have been able to easily buy inputs such as fertilisers, seeds, etc. It had also encouraged many people to get into the agriculture sector. Imports of fertilizers, tractors and other inputs went up. Who will be able to buy tractors yet we are aocating modernizing agriculture? We won’t modernize agriculture using rudimentary tools. We will not modernize agriculture if we are not going to open more land to increase production and use fertilizers and improved seeds.
So, why are some people opposed to the move?
We are not opposed to the move but the way these taxes are proposed is not fair. We are saying tax a certain group of farmers [commercial] and don’t tax them highly. By taxing the poor, you are killing the sector.
What do you anticipate as the negative consequences?
Like I said, once you tax people and you don’t support them to produce, you will be making them poorer. When you are taxing you need to tax people who are productive, who will then enjoy the services that government will provide. I think people will be discouraged from investing in the agriculture sector. The small farmers will be hard-hit. Let them tax large scale farmers. It is also possible that the tax would widen the income inequality gap.
What do you see as the major positives from this move?
Well, it will earn more revenue for the government. But once the revenues are collected, then people will be waiting to see whether the revenue will be invested well.
What does it mean in as far as consolidating the growth of this sector is concerned?
I don’t think reinstating the taxes is supporting the sector. Instead, the government appears to be telling people in this sector to look for other things to do. It is not going to be easy for the farmers. Sometimes our leaders read out interesting statements but they contradict themselves. For instance, if you are saying you want to grow your mother sector why then tax everything including hoes? President Museveni in the State of the Nation address said he is interested in transforming the sector but he is the same person supporting these taxes. The sector continues to receive minimal allocations. We have also failed to meet the quota of 10% of national budget as per the Maputo Declaration. On the face of it, for the rural people who are struggling to interpret the budget, it does not make sense at all.
What is your message to the law makers as regards this new tax policy?
Let them revisit the reinstated taxes on agriculture. Let them try to see how it is going to affect the majority – the local, poor farmers. If they go ahead to support the move, they will be suffocating the poor. I want them to come out positively. Let them segregate it by fairly taxing commercial farmers and leave the subsistence farmers to upgrade to commercial status.
Going forward, how optimistic are you that this will be seen as a wise decision in future?
I am not comfortable with the way these taxes are proposed. My thinking is let us support smallholder farmers by not taxing inputs, which are instrumental in leading them to commercial farming. I am sure at some point in future they will be encouraged to pay taxes. Once all of us can ably pay taxes and then our leaders invest the money in critical sectors – energy, transport and services – we will be on our way to Vision 2040.
Source : The Independent