New Taxes will Suffocate the Economy, MPs Warn

Members of the Parliamentary Committee on Finance, Planning and Economic Development have warned that the new taxes that the government is proposing to levy on fuel could instead suffocate the economy than helping it recover from the COVID-19 recession.

In its projections for the 2020/21 financial year, the government hopes to collect more than Shs 21.7 trillion from various new taxes that will compel the taxpayer to dig deeper into their pockets to sustain the state.

Appearing before committee on Tuesday, Finance Minister Matia Kasaija said that the projected collections will be an improvement from the outgoing financial year’s projections of more than Shs 18.8 trillion.

Kasaija hopes to slap a new 30 percent tax on beer produced from barley and malt which would translate into Shs1,115 per litre, and this will raise Shs20 billion.

He is also proposing a 20 percent tax on alcoholic drinks and spirits which is equivalent to Shs 2,300 per litre thus translating into which would generate Shs13 billion.

For the non-alcoholic beverages such as soda but not including fruit or vegetable juices, Kasaija is proposing a 12 percent tax increment or Shs250 per litre which will fetch more than Shs18 billion.

The Minister is also proposing excise duty increments on petroleum products. For petrol and diesel, the Minister intends to levy Shs 150 per litre while for kerosene, the proposed levy is Shs 100 per litre.

The committee, however, disagreed with Kasaija over his proposal to slap more taxes on fuel raising fears that this will only suffocate the economy that is already struggling because of the coronavirus shock.

Katerera MP, Hatwib Katoto called an abnormal increase, reasoning that the rural population that is still mostly dependent on kerosene lamps to light their homes will not afford it since many cannot afford the current charge.

Agogo Woman MP Franca Akello said that it was insensitive for the government to increase taxes in this period when Uganda has the highest fuel pump prices in the East African region.

She argued that this will stifle the economy hence urged that the minister to withdraw these measures in the spirit of supporting the economy.


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