By Musoke Lwoga
Civil servants, whose salaries were increased in the recently concluded budget, will not realize the impact of the pay rise, according to the Uganda National Chamber of Commerce and Industry (UNCCI).
Martin Okumu, UNCCI communications Officer, said the high taxes levied on basic utilities like fuel and electricity will affect the purchasing power of teachers and other civil servants despite their pay rise.
“The value of the increment is not just in its nominal value, but with its capacity to purchase goods and services. So increasing salaries at the same increasing the cost of commodities, does not mean anything. The increase in salary has been eaten up with the increased price of goods and services”, he said.
“Teachers’ salaries pass through the bank yet the cost of banking has been increased, so the increment has no real value”, he added.
Okumu said that government should have opted for other alternative means of broadening the tax base other than hiking taxes on basic utilities.
He suggested that government could introduce land tax, livestock tax and tax on agro forestry.
“Government would tax the big land owners, with a lot of redundant land. Busulu is only for squatters. They would also tax those with a lot of cattle, and those engaging in agro forestry, with large plantations of eucalyptus, tea estates. That would enable for agricultural mechanization and increase the tax base,” he said.
Okumu said that alcohol should have been taxed more because it’s not a basic utility.
“Wines and spirits are just a luxury. Taxes on alcoholic drinks should have been raised to discourage youths from engaging in criminal acts and being redundant through drinking. Those who decide to drink should pay more for government to raise more money,” he noted.
On the part of the increased bank charges, Okumu said that that would discourage individual savings. He argues that government should have levied taxes on larger income deposits rather than increasing the bank charges.
“There is a lot of redundant money in banks in the form of fixed deposits. Government should have considered taxing them instead of discouraging low income savings,” he said.
Okumu decried the increased cost of mobile money transfers, noting that the practice is likely to undermine the growth of the service.
Mugisha Stephen, credit support manager at ACE Global said that increasing tax on computers was uncalled for.
“Computers are basic tools for doing business. If Uganda is to have an established IT base, they should not have taxed them. They would rather have taxed consultancies and other service providers, who use computers,” he said.
According to Mugisha, the budget was passed without looking at how it would influence the economy.
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