Emojong Osere
19 June 2008
Benjamin Franklin, the former President of United States of America once said: "There are only two things that are certain in life, one must pay taxes and one must die."
The statement was re-echoed during a Budget Dinner organised by KPMG- Uganda in criticism that government was doing little to widen the tax base, which negatively impacts on the development of the economy.
In an evening debate on June 12 in Kampala, participants at the event said the government's decision to introduce tax reduction measures would automatically endanger efforts to mobilise more revenue needed for development.
"Introduction of any tax reducing measures such as tax holidays, lower tax rates or higher tax thresholds, would jeopardise revenue mobilisation efforts," Mr Lawrence Bategeka, a researcher at the Economic Policy Research Centre, said, adding that the government was introducing a narrow tax base trap.
Although the budget considered introducing tax exemption on certain groups and regions like the poor and Northern Uganda with the objective of encouraging savings and activating development, the move, Mr Bategeka said, would fail government investments as a result of inadequate revenue collections.
In the budget speech, last week, Finance Minister Ezra Suruma extended tax exemption on a number of products with the hope of making them affordable.
Excise duty on salt, a basic commodity for the majority of the population, was removed. Transport trucks with a loading capacity of 3.5 tonnes also received Value Added Tax exemption.
Other tax changes included income tax exemption for schools and tertiary institutions; extension of tax relief on the importation of construction material for hotels, hospitals intended to develop the tourism industry and to a limited extend to education institutions for the next one year.
Also in the bracket was the energy industry where heavy fuel oil received a Value Added Tax exemption. The minister said the move would encourage consumption.
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