Voice of America (Washington, DC)

17 June 2014

Uganda: Economists - Uganda's New Taxes Target Poor

Uganda's government has been struggling to find new sources of income since Western donors cut funding over the anti-homosexuality bill passed late last year. Economists say a raft of proposed new taxes unfairly target the poor, particularly farmers.

Uganda's proposed new budget, unveiled by the finance minister last week, aims to fill at least part of the shortfall left when some Western donors withdrew millions of dollars in aid earlier this year.

But Ugandan economists pointed out Tuesday that many of the proposed new taxes would hurt the most vulnerable members of society.

Speaking at a conference of economists in Kampala, they described these taxes as "regressive." Items like salt and kerosene, which are subject to new taxes under the budget, are disproportionately used by the poor, they said.

A tax on agricultural inputs also came under attack. Civil Society Budget Advocacy Group coordinator Julius Mukunda says taxing such basic supplies as garden hoes unfairly targets subsistence farmers, a sizeable percentage of Uganda's population.

He says this could have broader consequences.

"You tax a hoe - that is how desperate we can be," he said. "All these ones are going to make everyone who is deriving his livelihood from agriculture to suffer. If we have been fearing food insecurity, if we have been fearing drought, be rest assured [that] it is going to be at our door come next financial year if these proposals are put in place."

The Ugandan government has argued that in order to increase public spending in the coming year, as it plans to do, it has to raise revenue through taxes. New taxes are also being proposed on fuel, sugar and mobile money transactions.

The Ugandan parliament still has to vote on the budget before it becomes law. The vote is expected in September.

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