Africa-Press – Uganda. A concerned citizen has asked lawmakers on the Parliamentary Committee on Finance to scrap the Value Added Tax (VAT) imposed on bread.
Mr Erastus Ngirabakunzi, a resident of Ntinda, Kampala, made the request yesterday when the committee welcomed reactions and input from concerned citizens on the tax proposals that are currently under scrutiny by Parliament.
Mr Ngirabakunzi said bread is a highly consumed food product in the country and should, therefore, be tax-free considering that the majority of the population is already grappling with escalating commodity prices.
“Currently, bread is subject to a standard rated VAT of 18 percent. The VAT is mainly charged on the final consumer, making the price of bread high. The VAT on bread is about Shs693 for a 400 gramme loaf of bread,” Mr Ngirabakunzi said.
He said he conducted an analysis on bread and its consumption from which he established that the taxes imposed on it negatively impact the consumers.
“My analysis indicates that the VAT imposed on bread greatly increases the retail cost and affects the poor households across the country,” Mr Ngirabakunzi said.
He recommended that when the government accepts proposal to reduce taxes on bread, then the public should be notified.
“The tax measure should be accompanied by awareness of the public so that it results in price reduction [by doing] things like indicating on the cover of the bread (package) that VAT has been removed and, therefore, the price has dropped,” Mr Ngirabakunzi said.
The proposal comes less than a week after President Museveni advised Ugandans who cannot afford bread to eat cassava as an alternative.
In response to the proposal, the vice chairperson of the Finance Committee, Ms Jane Pacuto Avur, said: “You have not also taken concern of the fact that the majority of Ugandans cannot earn perhaps Shs10,000 per day and if bread goes for Shs4,500 and then that means that it is not a necessity of the majority of Ugandans.”
She added: “So as you advocate for this, you take that in mind. And that is probably why President Museveni recently advised Ugandans that with the increasing prices, we have options within our means.”
Mr Richard Wanda, MP of Bughoko South, said: “In the villages where we come from, bread is not something that is a must have. So it means (that) people who go for it are people who can afford it.”
He added: “We know as government that we need taxes and the best way to get tax is to look for revenue on products with inelastic demand.”
As an immediate alternative, the committee vice chairperson with support from colleagues on the committee advised Mr Ngirabakunzi to advocate for increased growth of wheat by Ugandans to reduce reliance on foreign states.
“Yes, the concern is valid but what if we took a direction that encourages Ugandans to produce more wheat and support the people to grow more wheat so that we stop importing from Ukraine and Russia,” Ms Avur said.
The committee resolved to have the matter concluded at an undisclosed date.
Slash taxes on energy drinks
Similarly, the leadership of the Kumbucha Manufacturers Association of Uganda yesterday urged Parliament to slash the taxes imposed on their products, which mostly comprise energy drinks.
Led by their president, Mr Sam Turyatunga, the fraternity wants the proposal to be captured in the Excise Duty Amendment Bill, 2022 that is among the Tax Bills being handled by the Finance committee.
Specifically, the Kumbucha makers asked MPs to push for a review that will compel the government to slash Excise Duty tax from 15 percent or Shs250 to 12 percent or Shs150 as imposed on every litre of their drink.
“We want these people to reduce the local Excise Duty that they impose on the Kumbucha products because we haven’t even been here for five years. They [government] are putting on us the same taxes like beer manufacturers [yet] these are companies which have been here before I was born,” Mr Turyatunga said.
The committee did not, however, conclusively rule on the matter as members only promised to come up with a final position after holding a closed-door meeting.
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