By Jane Nambi
Today is budget day and several controversial proposals were made for the new budget among them being the reinstating of water tax.
The water tax had been removed in the previous financial year, 2011-2012 with the intention of making safe water available to all people. However, with the tax to be re-instated, negativity is spreading over the budget.
Former shadow finance minister Oduman Okello said government wants to balance its books on the back of the poor. “Who created the deficit? Government abused public funds and Ugandans are now paying the price. They bought jets at Shs1.7 trillion without approval of Parliament and now they want to increase taxes,” Oduman said.
For the textile industry, government is seeking to remove all tax exemptions enjoyed by the sub sector so as to raise tax to an estimated sh15b. The same could be of computers even though under the current tax regime, electronics like computers were tax exempt in line with the stated policy to promote ICT in the country.
The budget is also expected to increase the exercise tax on locally produced spirits from 45% to 60%. This is according to a report by International Monetary Fund (IMF) dated May 18th. The excise tax for cigarettes from specific to ad valorem at 130% to raise Shs20b and impose excise duty on imported fresh juices.
The government is also expected to remove all income tax exemptions on agro-processing business income and instead impose an additional 10% marginal rate for the top bracket of personal income tax.
The report in part reads, “[IMF] staff supported the implementation of these revenue measures, but saw them only as necessary towards reforming the extensive tax exemptions that contribute to poor revenue performance.”