KAMPALA – The Speaker of Parliament Rt Hon Rebecca Kadaga has called upon the Uganda Revenue Authority and the Ministry of Finance to revise the taxes imposed on textile traders in Uganda.
Kadaga made the call while meeting the traders under their umbrella organisation United Tailors Group and Textile manufacturers association in down town Kampala.
In amendments introduced to the Excise Duty (Amendment) Act, 2020, government proposed to up the taxes on textiles coming into the country to 35 per cent or at US$5 per kilogramme, whichever is higher.
The move was intended to protect the local textile industry, but it was not long before traders rejected the measure, saying they import textile that is not manufactured locally and that they add value on it for onward export to other countries.
Government then gave traders a grace period of three months, which would make the taxes effective on the 1st of October 2020.
Kadaga said taxes are meant to help the traders develop themselves and not impoverish them or making them weak. She implored the ministry of finance and URA to change their perception of foreigners being the only investors.
“In this country, we have a problem, our people in finance think that investor means a foreigner, this is wrong. People like these are also investors. Let us go gradually, they say they want tax relief, you give investors free land, 10 years tax holiday just because they are foreigners but you fail to think of a Mukiga who is here. We need the tax but we should also be keen on how these taxes are oppressing our people, this is unrealistic, very unrealistic,” she said.
Kadaga added that government has to do more scrutiny in this regard so that they can appreciate who they are targeting and what the impact is going to be since government cannot afford closing industries since these clothes are not a threat to Ugandan textile industry.
“URA says they are following directives from finance but people from Ministry of finance are in their air conditioned offices seated and never walk to see what is in town. They are just in their offices signing about taxes, this is wrong. I implore you (people from URA) to go and tell the commissioner general that there is a sector we are killing. We are dealing with human beings and not stones. I am going to address the ministry of finance and the president on this issue. You have seen they are making clothes here, it is a big industry, please (URA) treat them as very important people.”
According to Hajj Asadu Kisitu Kigozi, the Assistant Commissioner Trade, URA the law that is connected to clothes being given a 10% increment or 5 dollars per kilo was started on 1st July that is how they (URA) were instructed to levy.
Kigozi says it was benched on the grounds of letting local factories grow and also create market for the Ugandan cotton (import substitution and export strategy).
“When it started, as URA, we implemented because we are implementers of the laws given to us from parliament upon being passed. When this law was passed, these traders came to us and told us their reasons and that is why they (our bosses implementing partners) came up with a grace period for the traders to get their products that were still stuck outside Uganda,” he says.
Kigozi adds that ever since they got the directive from parliament and the finance ministry to start implementing the law on October 1st, all the clothes they have been clearing are still on the tax fares they used in the last financial year.
Ms Bridget Mwagale the team leader of the traders also handed over their petition to the speaker asking parliament to look into the taxes that are almost getting them out of the textile business.
“We are not going to refuse paying the taxes madam speaker but we are requesting government to give us a grace period of like five years as we prepare ourselves and as we are educated about what to do. If we are given this time, I am sure the association will have grown enough to build the industries they want us to make here in Uganda,” she said.
MP Muhammad Nsereko (IND, Kampala Central), said these people would be advocating for a reduction in taxes after the four months lockdown of the Covid pandemic but their asking for a grace period only shows their patriotism.
“What these people are doing has not been done before in Uganda, truth is this is cheating these people. Canons and principles of taxation were all abused in increasing taxes for these people, the tax was surely uncertain,” he said.