MPs, plastic dealers lock horns over US$70 tax

KAMPALA, UGANDA: Parliament’s Committee on Finance, Planning and Economic Development has met officials from Uganda Manufacturers’ Association (UMA) and Uganda Plastic Recyclers Association to negotiate a settlement over the controversial US$70 levy on plastic imports in the country.

The Excise Duty (Amendment) Act 2022 had levied a 2.5 per cent or US$70 excise duty on plastic imports, whichever is higher, but the manufacturers cried out to President Museveni claiming their businesses were failing as a result of the tax.

President Museveni returned the Bill to Parliament for reconsideration, asking that some clauses be deleted.

One of the areas the President is uncomfortable with relates to imposition of levies on plastics which he said should be reconsidered.

“…to streamline the provisions for taxation of plastic products as provided for in the Excise Duty (Amendment) Act 2021, particularly, with a view to ensuring that the targeting of the excise duty is refocused away from sensitive sectors that utilize elements of plastic,” said Museveni in a letter to Speaker Anita Among recommending the removal of the clauses he isn’t comfortable with.

In a letter to the committee, UMA Chairman, Deo Kayemba criticised the clause.

“UMA proposes that the law should be repealed because of its far reaching consequences and instead measures be instituted that provide clarity on the management of the pollutant plastic products which are known and well documented,” said Kayemba.

Muhammad Muzammil, a staffer at UMA who appeared before the committee said that nature of tax is unheard of.

“Uganda is the only country in the whole world that has taxed raw materials,” he said.

The move to levy the tax on importation of plastics was intended to encourage recycling and save the environment but Muzammil said finding the plastics for recycling is difficult and that factories are idling.

“Majority of the plastics are rigid plastics; they take longer [in usage] the cycle for recycling them is therefore, longer as opposed to the single use plastics,” he said.

Committee Vice Chairperson, Jane Pacutho was unamused saying it is the duty of everyone to pay their fair share of taxes following complaints of double taxation from the witnesses.

“Who is not double taxed?; This will be leaving other people with the burden of paying yet one of the principles of taxation is that it must be fair,” she said.

The Chairperson of the Committee, Keefa Kiwanuka said the levy was intended to generate Shs60 billion in revenue for government wondering how that gap in revenue will be addressed in the event that the levy is removed.

The committee has 45 days within which to report back to Parliament on their findings and recommendations regarding the president’s proposal.