13 November 2012

Uganda: 'Timber Tax Evaders Undermine Sustainable Trade'

A new report has warned that if the underpayment of taxes currently estimated at 50% on imported timber from DR Congo to Uganda continues illegal logging will escalate leading to further destruction of forests.

The report entitled, "Timber movement and trade in Eastern Democratic Republic of Congo and destination markets in the region stated, "In Uganda, underpayment of duties and taxes on imported timber was estimated at 50% in 2011 is the main issue in the illegal trade."

It added, "The most obvious economic impact of the trade is the reduction of legitimate tax revenue to the State but of potentially more significance is the distortion of the market resulting from tax avoidance. The dealer who avoids taxes gains a competitive advantage which forces other dealers to engage in the same malpractices in order to compete and survive.

Illegally imported timber, according to the report to be launched at Entebbe Resort Beach Hotel on Monday was commissioned by World Wildlife Fund for Nature (WWF) also affects the competitiveness of locally produced timber, lowers prices and ultimately acts as a disincentive to the indigenous timber producers. It also states that illegally traded timber increases the risks to investors, reducing their willingness to invest in timber processing or timber production.

The illegal timber trade in DR Congo, according to the report is driven by poverty and limited alternative economic activities combined with strong demand for high quality hardwood timber in the neighbouring countries. "The trade is illegal in the DR Congo because of lack of capacity in the public administration which is an economy wide issue that goes beyond the forestry sector. Measures designed to improve the trade and mitigate the associated environmental, social and economic issues should be focused on capacity development in the DR Congo," stated the report.

The report also revealed that the biggest market for the timber is Kenya with an estimated import of 32,100 cubic meters followed by South Sudan at 10,700 cubic meters and that Uganda imports 8,700 cubic meters while Rwanda imports 7,000 and Burundi's 1,000 cubic meters. The total volume amounts to 60,000 cubic meters.

"There is a lot of illegal timber trade, we do not know how big it is but the report has come with an estimate and it also describes the routes for the timber," David Duli, the director of WWF Uganda- Country Office told New Vision in an interview. "We are going to get governments and institutions to monitor since this is a regional problem."

The report named the main entry points for timber into Uganda from DR Congo as Bunagana, Mpondwe, Busunga, Ntoroko and Rwebisengo , further up along the west Nile border are Goli, Paidha, Vurra, Lia, Odramachako and Oraba. The main exit point for timber destined to Kenya is Busia and Malaba along Uganda's eastern border with Kenya.

Mahogany is the main species going to the Kenyan, Ugandan and Rwandan market while South Sudan market is dominated by soft woods such as white Nongo and Nkalati.

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