June 14, 2013

Ugandans Angered By Proposed Taxes On Fuel, Water

Residents and local leaders in Luweero have condemned the newly proposed value added tax on fuel and Water describing the government as insensitive to the poor. In her Budget speech on Thursday, Finance Minister Maria Kiwanuka reinstated the 200 shillings excise duty on every litre of kerosene 50 shillings on every litre of petrol and diesel. She also instituted value added tax (VAT) on domestic water.
Maria Kiwanuka the country's Finance Minister Proposed Taxes On Fuel, Water
Maria Kiwanuka the country’s Finance Minister Proposed Taxes On Fuel and Water

Residents and local leaders in Luweero have condemned the newly proposed value added tax on fuel and Water describing the government as insensitive to the poor.

In her Budget speech on Thursday, Finance Minister Maria Kiwanuka reinstated the 200 shillings excise duty on every litre of kerosene in what she described as a move to discourage the practice of adulterating diesel by mixing it with kerosene. Kiwanuka explained that the move will generate over 15 billion shillings as revenue in the financial year 2013/2014.

Kiwanuka also slapped another excise duty of 50 shillings on every litre of petrol and diesel which will see government raise 72 billion shillings in the coming financial year. She also instituted value added tax (VAT) on domestic water and hopes to raise 8 billion shillings as revenue.

However the proposed VAT on essential commodities such as water and kerosene has drawn angry reactions from local leaders, residents and activists who are calling upon members of parliament to desist from passing the budget.

The Chairman Local Council Three for Wobulenzi town council, Sebastian Ssebagala, says that introducing of VAT on water will instead make it more inaccessible and unaffordable to his residents. Ssebagala says that in Wobulenzi town council only 750 out of 60,000 locals can access piped water and the supplier—Transit Company—can pump only 300,000 litres. He adds that the water is pumped in twelve hours but used in two hours.

Ssebagala explains that the firm is stuck with 500 applications and can’t connect them to piped water because it lacks capacity. He expected the Minister to instead introduce new subsidies or grants where such companies can acquire funds and buy machinery to pump more water for the poor.

Annet Nalubwama, a resident of Nakadingidi Zone in Wobulenzi, says that the new tax is likely to force her to draw water from nearby swamps. Nalubwama currently uses 700 shillings on water daily but doesn’t earn more than 3000 from vending milk in the market. She wants MPs to stop the new taxes.

Another resident John Ssegula criticized Minister Kiwanuka for what he called commercializing water yet it’s a necessity.

Edward Nsubuga, a resident of Kyegombwa village in Luweero Sub County, says that he is equally disappointed over Minister Kiwanuka’s move to increase  taxes on kerosene knowing it’s a major source of energy for rural poor who can’t access electricity.

Nsubuga says he has been lamenting for using 2,800 shillings and with new taxes the cost is likely to go up.

Abraham Mulindwa, a social worker in Luweero Sub County says the government can stand on old tax rates if Minister Kiwanuka covers gaps used by government officials to siphon funds from treasury.

Sunday Richard Ale, a focal person for Forum for Women in Democracy, says he is equally surprised that government has failed to use its bodies that include Uganda Bureau of Statistics, the Police, and Courts of Law among to fight adulteration of fuel and instead slapped a tax on rural poor. Ale says introducing new taxes will not stop the vice.

Among other key proposals, Kiwanuka allocated close to 2.4 trillion shillings to roads and transport sector, while 1.8 trillion shillings goes to education.  Agriculture was given 394.4 billion shillings.

Out of the total budget of 13.16 trillion shillings, at least 10.5 trillion or 81.1% will be internally financed.  The Uganda Revenue Authority (URA) will collect taxes amounting to 8.48 trillion, while 275 billion shillings will come from Non-Tax Revenues. The other local sources include issuing of Government securities worth 1.04 trillion shillings among others.

Other proposed local sources for URA include new taxes on gambling, international calls, mobile money, wheat flour and hotel accommodation. The minister also introduced new levies on motorcycle registration, vehicle registration, petrol and diesel.

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