Uganda proposes new taxes on fuel, building materials
Saturday April 06 2024
Uganda's members of parliament during a session. PHOTO | ABUBAKER LUBOWA | REUTERS
Uganda is proposing a raft of taxes on key products such as fuel and building materials in the next financial year, raising fears of an increase in the already high cost of living.
The government terms the proposals necessary to cover a revenue shortfall expected as it plans to cut down on borrowing.
The proposals tabled before Parliament last week by the State Minister of Finance in charge of General Duties Henry Musasizi are in five sets of tax Bills: Excise Duty Amendment Bill 2024, Stamp Duty Amendment Bill 2024, Income Tax Bill 2024, Value Added Tax Bill 2024 and Tax Procedures Amendments Bill 2024.
The proposals seek to impose a Ush500 ($0.12) on each 50kg bag of cement, adhesive, grout, white cement or lime. They also seek to introduce a Ush1,550 ($0.39) charge on every litre of gasoline, Ush1,230 ($0.31) on each litre of gas oil and Ush1,550 ($0.39) on every litre of paraffin.
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Other areas where the government is proposing new taxes are bottled mineral water with 10 percent or Ush75 per litre whichever is higher, 12 per cent or Ush150 per litre of opaque beer whichever is higher and five per cent withholding tax on gains earned from the sale of land in cities and municipalities, sale of rental property and sale of share of a private company.
While appearing before Parliament’s Budget Committee, Mr Musasizi said the government intends to generate Ush1.9 trillion ($488 million) from the proposed taxes to finance the proposed Ush58.3 trillion ($15 billion) budget for 2024/25.
The proposed budget, according to the Ministry of Finance, will focus on full monetisation of the Ugandan economy through agriculture, industrialisation, expanding and broadening services, and digital transformation and market access.
The minister also revealed that due to the high interest rates on the global credit market, Uganda has backed off plans to borrow about $414 million from external lenders that would have covered the gap created by revenue collection shortfalls.
The proposals have however irked a section of legislators and tax experts who contend that they target majority of the poor, leaving them exposed to adverse effects like increased standards of living.
Legislators said there is a need to widen the tax base instead of introducing new ones.