MPS protest Gov’t proposal to tax bank withdrawals

PARLIAMENT, UGANDA: Members of Parliament have protested against the proposal by Government to impose a tax on money withdrawn from commercial banks and Agent banking units.

The issue was raised by Kassanda North MP Patrick Nsamba who recounted that against the wish of many stakeholders, the Government had introduced a tax on mobile money withdrawals.

According to Nsamba, Ugandans are currently getting cheated as the charges on their mobile money transactions usually go beyond what is required by law.

“The social media is awash with proposals to charge a tax on cash withdrawals from banks. This would be double taxation. Why should the Government tax money which they have already taxed?” Nsamba wondered.

Clarifying on the matter, the state minister for finance, David Bahati, said: “The matter relates to an internal memo written by the deputy secretary to the Treasury to the governor Bank of Uganda. In line with our rules of procedures, it would be a tough job of Parliament if we started debating internal memos of other institutions.”

However, the Speaker of Parliament, Rebecca Kadaga, insisted: “This is a matter which concerns taxation and you have not come to the House for approval.”

The minister explained that it is a tax proposal for discussion within the executive and had not reached at the stage of getting to parliament.

Kalungu West MP Joseph Ssewungu said although it was an internal memo, it had got into the public domain and, therefore, explanations had to be given.

“Is it in order for the minister not to give us a better position? You have had taxes on mobile money transactions which were not passed by Parliament,” he added.

Bugabula County MP Maurice Kibalya said: “We want the minister to know that we represent Ugandans, who need answers on this matter.

The way the minister has responded implies he is aware of the tax proposal.”

Kasilo County MP Elijah Okupa clarified that it was not a memo, but a letter dated February 2021. Okupa read the details of the letter.

Kadaga said the finance ministry should not implement the move without authority from Parliament.

“I expect the minister to bring here a number of tax Bills and I want the minister to make an undertaking that the ministry will not implement that proposal before you get authority from here,” Kadaga directed.

Bahati assured the legislators that they have never implemented any tax before seeking Parliament authorisation and they would never do so.

In its report on the draft national budget (Budget Framework Paper) for the 2021/2022, the Parliament budget committee observed that the proposed national budget sh45.6trillion for the next financial is way beyond what the Government’s revenue collection can afford.

Uganda’s debt to GDP ratio has reached 49% and, therefore, close to the risky zone of 50% where it becomes difficult for the country to pay the debts and the country’s revenue collection remains one of the lowest in the world at a tax to GDP ratio of only 14%.

The Government has set a revenue collection target of sh21.9 trillion for 2021/2022 and this implies that the biggest portion of the budget will be funded on money which will be borrowed externally and internally.

Last year Parliament rejected most of the tax proposals the Government had presented, arguing they would worsen the economic situation of companies and Ugandans who had been greatly affected by the COVID-19-induced economic crisis.

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