MPs Adopt Report Recommending Scrapping Of Taxes On Agricultural Inputs

3023 Views Kampala, Uganda

In short
Parliament has adopted the report of the committee on Agriculture with a recommendation that the 18% tax on Agricultural inputs be scrapped.

Parliament has adopted the report of the committee on Agriculture with a recommendation that the 18% tax on Agricultural inputs be scrapped.
The report was tabled last evening but Members of Parliament did not debate it with a directive from the Deputy Speaker Jacob Oulanyah that the issues therein were very clear and elaborate. The MPs only raised issues of clarifications to the Minister of Agriculture and that of Finance.
The Committee report on Agriculture, Animal Industry and Fisheries on the Ministerial Policy Statements and Budget Estimates for Financial Year 2014/2015 was tabled by the Committee chairperson Mathias Kasamba with recommendations which he said needed special attention.
Meanwhile, before the report was tabled, Oulanyah requested the State Minister for Finance Fred Omach to address the House on the Finance Ministry’s position on the tax on Agricultural inputs before the debate on the report could commence.
Omach told the House that the issue of taxation would be handled under the various taxation laws that are to be looked at by Parliament, but that the taxes on agricultural inputs were for the good of the economy.
Currently, Agriculture contributes over 26% of GDP. Minister Omach says that this is because most of the players in the industry are outside the formal sector.
Omach told MPs that the tax on agricultural inputs was more to attract people from outside the tax bracket to come within so that they enhance the revenue collection to GDP from the current 13% where the country is stuck to at least near the regional average currently at 18%.
In the 2014/2015 Financial Year Budget, Finance Minister Maria Kiwanuka introduced new taxes including an 18% value added tax on Agricultural inputs which she said would bring the country Revenue of over 30 billion shillings.
Omach told MPs that in the instance that the tax on Agricultural inputs is not sustained, then Parliament will be required to help the Finance Ministry see how the budget can be balanced.
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Kasamba noted that the imposition of 18% VAT on Agricultural inputs and supplies had also affected the National Agricultural Research Organisation (NARO) and that now it is required to pay additional 3.6 billion shillings in taxes which were not planned for in 2014/15 financial year.
The   Committee also recommended that Government steps up funding of the Agricultural sector to at least 7% as resolved in Kyankwanzi by the ruling NRM party Caucus in 2011.
Agriculture in the 2014/2015 Financial Year was allocated 3.19% of the budget hence underfunded contrary to the Maputo Declaration that requires countries to allocate 10% of the budget to the sector. The allocation still falls short of the National Development Plan recommendation of 5%.
The committee also recommends that Government expedites the establishment of enabling policies to guide and stabilize the Agricultural sector for consistent programme implementation.
Committee chairperson Mathias Kasamba said that in  the absence of  the National Agriculture Policy  and  accompanying specific policies like the one on Mechanization of  Agriculture, interventions such as extension, seed, irrigation, fertilizer, livestock and others have  been on  project approach and ad hoc thus endlessly undergoing continuous reforms.
The committee further recommends that local government agriculture conditional grants of 1.22 billion shillings be re-allocated to NAADS Secretariat for promotion of technologies and seed distribution.
It says that since NAADS is undergoing reforms following the decision to introduce a single spine extension  system,  in  the meantime, all funds under the programme should be  ring-fenced for  NAADS related activities both at the Secretariat and local government level.

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About the author

Olive Nakatudde
Olive Nakatudde is a URN journalist based in Kampala. Nakatudde has been a URN staff member since 2013.

Nakatudde started out in journalism in 2009 with Dembe FM radio in Kampala. In 2012, Nakatudde joined Voice of Africa as a political reporter. She has been a photographer since her journalism school days at Makerere University.

Nakatudde is interested in good governance and public policy, which she reports on intensively from the Uganda Parliament. She is a keen follower of cultural affairs in Buganda Kingdom and covers the kingdom's Lukiiko (parliament). Nakatudde also reports on education and health.