Over 1 million farmers have petitioned parliament in protest of the new tax measures on agriculture inputs. The petition which is also asking MPs to block the measures was submitted this morning to the speaker of Parliament Rebecca Kadaga.
The tax measures first presented in the FY 2013/2014 budget estimates include the removal of all tax exemptions for agriculture chain inputs and the introduction of 18 per cent Value Added Tax (VAT) on agricultural products. It covers hoes, pangas, poultry and livestock feeds, fertilizers, pesticides, seeds, wheel barrows, diary machinery, and packaging material to diary and milling industries.
VAT was also introduced on the Supply of specialized vehicles, plant and machinery services and civil works related to roads and bridges construction, Supply of cereals, grown, milled or produced in Uganda and Supply of processed milk and milk products.
The farmers are concerned that although agriculture is considered as one of the primary sectors meant to unlock the binding constraints to the transformation of the economy, it remains among the least prioritized sectors, compared to other sectors like public sector management and administration.
Julius Nkunda, the lead petitioner from the Civil Society Budget Advocacy Group (CSBAG) advised that government explores other avenues of raising taxes other than taxing agriculture, which is still perceived as the backbone to Uganda’s economy.
Agriculture received a 3.2% share of the national budget with an allocation of Ugx 440.78 billion yet it is required to feed the growing population, whose growth rate is 3% per annum; employs more than 65% of the Labour force and provides more than 90% of export receipts of the economy.
But according to Nkunda the less priority accorded to agriculture is likely to block all commitments to modernize agriculture. He adds that instead, farmers will invest less, which will translate into less production and less jobs in the sector as a result of the tax burden.
Sam Kasoma a farmer from Luweero district and Haji Ssengooba Bbwagu, another farmer from Iganga district are demanding for an outright objection to the tax proposals saying that if sustained, the proposals will drive Uganda’s inflation to unmanageable figures.
The Speaker of parliament Rebecca Kadaga pledged swift action from the legislators in reviewing both the petition and the tax measures. Kadaga committed the petition to the joint team of the agriculture and finance committees of Parliament.