KAMPALA– The decision by Government to amend the Income Tax Act to impose a 1% tax on all agricultural produce has been rejected by sugarcane growers across the country, calling on Parliament to prevail over the tax.
This saw a group of sugarcane growers petition Speaker Rebecca Kadaga, saying the newly introduced withholding tax on their sales is likely to drive the sugar prices higher.
The 1% tax on all agricultural produce legislation came into effect on July 1, 2018.
Under their umbrella body, the Uganda National Association of Sugarcane Growers, the farmers called for exemption from this tax arguing that sugarcane growing is a risky venture that is susceptible to extreme weather and the decision by Government is likely to impoverish the growers.
While presenting the petition, Isan Budugo, the lead petitioner lashed out at the Finance Committee of Parliament that handled the Bill for not consulting them, saying if left in place, the tax could lead to adverse effects in the industry.
“The aim of exempting farmers from this will not only reduce the general cost of production but also reduce prices of sugar. Sugarcane is a political crop because of the number of people involved,” he said.
According to the petition, the lowest cost of growing and delivering a metric ton of sugarcane is Shs130,000, so to survive, farmers need to be paid Shs175,000.
Budugo added that small scale farmers produce 90% of sugarcane while sugar companies only produce 10%, with Government set to earn over Shs600Bn annually from the industry, despite not investing in the sector.
“The industry has faced many challenges including low prices due to lack of order. This has made it very difficult for us to move forward.
We have been negotiating with millers to increase the prices for the whole of last year but [they] are not interested in increasing the prices. Kakira dropped the sugarcane price from Shs175,000 to Shs128,000. SCOUL, Kamuli, Mayuge are giving Shs130,000 per ton and Kinyara Shs100,000,” Budugo said.
The sugarcane growers therefore called on Parliament to expedite the Sugar Bill, 2016 passing into law. The proposed instrument hit a snug over allegations of bribery at the Tourism and Trade Committee of Parliament that was scrutinising the Bill.
While introducing the Bill before the Committee last year, Amelia Kyambadde, Minister of Trade highlighted that the main objective of the Bill is to ensure that there is a sustainable, diversified, harmonised, modern and competitive sugar sector to meet domestic, regional and international sugar requirements.
Although the sugarcane growers welcomed the Bill, they protested some clauses that they argued placed more powers in the hands of millers at the expense of the out growers. They argued that this would open gates for their exploitation.
Section 22 of the Sugar Bill calls for zoning of sugar mills and if passed into law, it would be illegal for the Sugar Board to license sugar mills within 25Km radius to each other.
The Bill proposes a fine of five currency points (approximately Shs10m) for anyone that sets up their mills within the 25Km radius.
Speaking after receiving the petition, the Speaker stressed the need for an Agricultural Bank to extend affordable loans to farmers. She argued that funding from commercial banks is too expensive for the farmers and undertook to convene a joint meeting between farmers and sector ministers mainly Trade, Agriculture and Finance to discuss the matter.