Henry Musasizi, Minister of State for Finance, has defended the increase in tax on fuel products from Shs1450 to Shs1550, citing Uganda’s economic recovery from the COVID-19 pandemic. He stated that the increment aligns with Parliament’s earlier recommendation to raise taxes on fuel products every two years, aiming to generate an additional revenue of Shs200.92 billion from fuel tax.
However, MPs on Parliament’s Finance Committee rejected a proposal to exempt Bujagali Hydro-electricity Limited from paying tax for another year. This proposal, made by Henry Musasizi, was not included in the Income Tax Amendment Bill 2024 initially tabled before Parliament. The Minister sought to extend the tax exemption for Bujagali Hydro-power Project up to 30th June 2025 to reduce electricity tariffs temporarily.
Karim Masaba, MP for Mbale Industrial Division, questioned the legitimacy of the Minister’s proposal, noting its absence from the tax bills presented to Parliament. Consequently, Amos Kankunda, Chairperson of the Finance Committee, requested the Minister to formally present the proposal to Parliament for deliberation.
On 28th March 2024, Minister Musasizi introduced five tax bills, aiming to raise revenue of Shs1.9 trillion if adopted by Parliament. He defended these tax measures, asserting that they aim to improve the existing tax framework without unduly burdening businesses and individuals. The adjustments are part of a comprehensive strategy for domestic revenue mobilization to support the 2024/25 budget.
The proposal to impose a 0.5% levy on cash withdrawals from agent banking was also defended by the Ministry of Finance. Musasizi explained that this measure intends to broaden the scope of money withdrawal services, ensuring equitable tax treatment for similar services.
Regarding the new tax rate on construction materials like lime, the Minister clarified that the levy on cement isn’t new, but there was a need to extend it to other construction materials.
Additionally, the proposal to impose a 5% Capital gains tax on non-business assets such as land and rental properties in cities and municipalities was defended. Musasizi argued that this measure aims to widen the tax base and enhance the progressivity of the tax system.
Government is also seeking to improve tax compliance by introducing penalties for failure to file tax returns, with a proposed penal tax equal to 50 currency points per month or 5% of the tax due for the outstanding period.
