RELIEF! Parliament waives 7bn tax for state prosecutors

By Prisca Wanyenya

Come July 2023, all state prosecutors will start smiling their way to their banks after Parliament approved a proposal to amend Section 21(1)(q) of the Income Tax Amendment Bill 2023, to include Public Prosecutors as persons whose employment income should be exempt from tax.

The decision followed a spirited request made by Jane Frances Abodo, the Director of Public Prosecution before Parliament’s Finance Committee where she urged Parliament to correct the anomaly that has condemned her team to earning peanuts arguing that Prosecutors are the only actors in the criminal justice cluster whose employment income is still being taxed, this creating the need to harmonize the benefits and other incentives of players in the same cluster for better performance.

Keefa Kiwanuka, Chairperson Finance Committee informed Parliament, “Prosecutors have the same academic qualifications as their counterparts in the judiciary, work in the same environment, and carry a similar workload. It is only fair that their salaries are equally exempted from tax just like their counterparts. Every single year, the office loses a big number of staff to the judiciary because of the tax incentive and they leave with very high skills accumulated over time that cannot easily be replaced hence leaving the ODPP in a state of stagnation over time.”

The Opposition led by Muwanga Kivumbi (Butambala County) warned that Exempting any given group of civil servants from paying tax on their employment income creates a non-neutral tax system, erodes the tax base and undermines tax morale and it will open floodgates whereby more people will request similar treatment like State attorneys in the Ministry of Justice and Constitutional Affairs will demand tax exemptions on their salaries.

“The question is what policy, what research will that have consequently on the tax revenue of the country? In Uganda who will be paying if everybody is out? That is why we are saying this guesswork, gambling on fundamental things. You have no policy, you have no plan. You have nowhere to start, where to stop, who to include, who to exclude. The whole thing looks shabby give that some of you shouldn’t contribute,” said Muwanga.

There was a proposal to have state attorneys in the Attorney General’s chambers considered in the bonanza, but Ibrahim Ssemujju (Kira Municipality) reminded the movers of the new proposal not to offend the constitution that bars Parliament from imposing a tax or charge on the consolidated fund, as this is a reserve of Government.

When the question was put by Speaker Among on whether the state prosecutors should be gifted with tax exemption, there were mixed reactions to the vote, although the Speaker affirmed that those in favour of the exemption had taken the day, prompting some MPs to threaten her of a legal battle in court, a challenge she gladly welcomed.

According to the DPP, the tax exemption, would likely cost Government Shs6.827Bn, although this figure is disputed, by Ministry of Finance that warned that the tax waiver is likely to cost Shs7.5Bn going by the current wages and staff at the Office of Directorate of Public Prosecution

The Ministry of Finance had initially rejected the tax exemption request on grounds that tax exemptions grossly undermine Government revenue efforts, quoting a report from the Ministry of Finance which put the 2021/2022 revenue foregone on account of tax expenditure amounted to a tune of Shs2.862Trn, saying there is therefore no need of granting income tax exemption to select categories of employees in this case state prosecutors.

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