President Museveni has returned three bills to Parliament including the recently passed Excise Duty Bill, 2013 in which Parliament rejected the 200 shillings proposed duty per litre of Kerosene.
Other bills that the President returned to Parliament for reconsideration include the Finance Bill, 2014 and the Public Private Partnership Bill, 2012.
In a letter to the Speaker of Parliament Rebecca Kadaga dated 29th September 2014, Museveni returned the bills in exercise of his power vested in him under Article 91 clause 3b of the Constitution of Uganda.
The letter was read out by Speaker Kadaga to Tuesday plenary session in accordance with rule 132 under Parliament’s Rules of Procedures which requires such a communication to be read out to MPs if the House is not in recess.
While passing the Excise Duty Bill, 2014, Parliament rejected a proposal by Finance Minister Maria Kiwanuka in the 2014/2015 financial year budget to impose excise duty of 200shillings per litre of kerosene. The projected revenue from the tax measure by Government was projected at 15billion shillings.
Before rejecting the duty, MPs urged that the measure would lead to increase in prices making kerosene expensive and unaffordable to the rural and urban poor.
However, in his letter to Parliament, Museveni notes that there is no evidence that the consumers have benefited from the removal of the excise duty since the usual prices have changed significantly.
He explained that the price of kerosene in financial year 2010/2011 before removal of excise duty was 2,236 shillings and after the removal in 2011/2012 the price increased to 2,836 shillings.
He added that since the excise duty was proposed in the Budget, the price of kerosene had increased by only 50 shillings a litre from 2,850shilings to 2,900 shillings.
Museveni said that the change shows that the removal of the excise duty largely contributes to the dealers since they are reluctant to adjust the price downwards hence facilitating people mixing kerosene with diesel.
In the letter, Museveni also noted that Parliament also need to discuss other significant tax measures proposed by government that he remitted citing the proposed increase of 50 shillings from 25shillings per kilogram of Sugar. This was projected to raise 7billion.
The 10% duty on financial transactions to generate 22billion and the 10% duty on mobile withdrawal fees to raise 16million shillings.
Museveni urges Parliament to reconsider its position on the proposed new taxes because they are critical for financing of infrastructure like roads and power to make Uganda more competitive.
Museveni also noted that the Excise Duty Bill, 2013 did not have a commencement date saying that Parliament should consider inserting 1st July 2014 as the commencement date.
In the same letter, Museveni noted the returning of the Finance Bill 2014 for Parliament to reconsider clause 2 of the bill which sought to amend section 68 of the Uganda Communications Act to provide for transfer of dividends collected by UCC from Communication operators to the consolidated fund.
He noted that the revenue out of this measure was projected to be 8billion. Museveni explained that the proposed transfer of levy collected by UCC is consistent with the Public Finance Management Bill, 2012 which proposes that income tax revenues collected by ministries, departments and agencies should be remitted to the consolidated fund.
In the letter Museveni argues that failure to approve these measures has serious implications to the revenue collections. He notes that as of August 2014, URA posted a shortfall of 68 billion shillings.
Should the new taxes not be approved, the revenue shortfall at the end of the financial year is estimated at about 130 billion shillings. Museveni says this shortfall will affect service delivery.
Speaker Rebecca Kadaga then requested the Finance Minister in charge to retable the bills. State Minister for Finance in charge of Privatization Aston Kajara re-tabled the Excise Duty Bill, 2013 and Kadaga referred it to the Finance Committee for scrutiny and report to the House in two weeks