KAMPALA – The Uganda Alcohol Industry Association has cautioned government over the implementation of digital stamps saying that the move if upheld will increase the cost of production and end up affecting the final prices at which consumers purchase alcohol in the country.
The Association made the plea while appearing before the Parliamentary Finance Committee that is investigating a motion tabled by manufacturers protesting the move by Uganda Revenue Authority to implement the digital tax.
The manufacturers argued that they are not against government program to pay tax using digital stamps however they do not support government decision to make them to pay the cost of installation of these digital stamps in their factories.
Onapito Ekomoloit, Legal & Corporate Affairs Director at Nile Breweries Limited informed the Committee that Government forcing them to meet the cost of payment of these stamps, the cost of production is likely to go up which will result into the increase in the prices of their products and says that once masses stop consuming these products because of the increased prices Uganda revenue authority will not be able to collect any taxes from them.
He said, “If this isn’t done, the full cost of production will come crushing on our members with dire consequences, some of the manufacturers will have their products untenable on the market and will have to close shop, others will have to close shop. Others will have to pass the cost to consumers by price increase. Experience shows consumers will simply switch to informal alcohol, our production volumes will crush and so will be revenues to URA.”
It should be recalled that Speaker Rebecca Kadaga directed the Finance Committee to examine the petition by the manufacturers and consumers of beverages in Uganda after they petitioned Parliament calling for halt into the implementation of the current digital tax stamp requirement by Uganda Revenue Authority.
The motion was presented by Gideon Onyango (Samia Bugwe North) who called for an investigation into how URA settled for SICPA- South Africa as selected contractor saying the selection flouted Uganda’s procurement laws.
The manufacturers accused URA of totally disregarding and abusing the existing procurement laws, adding that Ugandans were locked out of the whole process that denied the country of revenue and capital flight.
The group also raised queried on decision by URA on the issuance of Digital Tax Stamps at varying costs like Shs15 for a bottle of water, Shs20 for a bottle Soda, Shs55 for a bottle of beer, Shs80 for a packet of Tobacco and Shs185 for a bottle of Spirit and wines describing this as discriminatory and yet the Digital Tax Stamp is the same and its purpose is only to track and trace the product.
The petitioners made a number of pleas among which include, calls to have Parliament to place a halt on the Digital Tax Stamps until committee investigates the procurement procedures and all matter put in the petition.
The manufacturers also want Parliament to investigate the cost of the stamps, selective method of implementation and mechanisms to bring the informal sector to taxable capacity prior to the implementation of the tax measures.