Formalize Tax Base Instead of Imposing New Taxes – Private Sector

Private Sector Foundation Uganda (PSFU) have opposed the idea of government introducing new taxes every other financial year, saying the trend is frustrating to the business sector.

They say that rather than creating a new tax regime, the government should address issues of selective taxation on businesses and also consider formalizing the huge informal sector base.

The PSFU Executive Director, Gideon Badagawa said this while presenting opinions of the private sector on the proposed taxes to Members of Parliament.

He opposed the taxes imposed on mobile money transactions including 1% on transactions charged on commission saying this affects innovation in the ICT sector that would have led to the booming of business.

Badagawa urged government to stop thinking of introducing new taxes every financial year but rather formalize the tax base in order to raise the revenue to support its budget.

He noted that a number of businesses in the informal sector have been left to operate without remitting taxes hence suppressing the few.

“We have seen a number of firms not being taxed while others pay tax within the same sector. I will give an example of the water industry. We have more than 130 water manufacturers and bottling plants but only around 18 are taxed since their locations are known,” Badagawa observed.

In addition, Badagawa observed that the introduction of new taxes every other year frustrates the public hence advised that government widens the tax base by including every Ugandan in business to participate in paying taxes as this will reduce the country’s tax burden.

Meanwhile PSFU have also challenged government’s proposed ban on imported user vehicles beyond eight years of manufacture, saying the move is untenable for low income Ugandans.

The private sector instead propose that the manufacture duration be extended to 15 years since Ugandans have not yet reached a level of purchasing brand new vehicles, especially those that are used in operating business.

Moses Ogwal, the Director Policy Advocacy at PSFU argued that it should be upon government to enforce the mandatory inspection of vehicles before they enter the country to ensure they don’t produce emissions that are deadly to the environment.

“We request government to make use of the Pre-Inspection and Verification on Conformity (PIVOC), and when those cars get here, we already have SGS and UNBS that could further inspect the cars, we have seen many new cars under 8 years but with fumes,” Ogwal said.

A week ago, several Associations of car dealers operating in Uganda similarly criticized the proposed ban saying it was not suitable for a country like Uganda where majority of the people still buy used vehicles on credit even when these vehicles are far cheaper than the 2011 models government is pushing for.

They asked government to implement the ban in a phased manner beginning with the vehicles that fall under the 15 year age limit bracket.

According to the car dealers, out of the 50,000 motor vehicles that Uganda imports annually, only 10% are those manufactured between 2011 to date.