Put on hold taxes on agro inputs and equipment
Publish Date: Aug 21, 2014
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By Rev. Fr. Fred Jenga

I find the government’s proposed tax on agro inputs and equipment inconsistent with its policy position to modernise agriculture and fight rural poverty.

I add my sentiments to those who are asking the government to reconsider its position.

You cannot help poor rural farmers to fight poverty by adding taxes on the inputs and equipment they use. It is like setting out to build your house from your savings, and at the same time embark on stealing your own construction materials! This approach to economic development is self-contradictory.

An absence of taxes on agro inputs and equipment should be considered a long time investment into the country’s agricultural sector.

I am passionate about issues of rural poverty. The endemic rural poverty in places such as Busoga (my home region) is simply unacceptable. I see great potential in agriculture and I am excited about President Museveni’s ‘Four-Acre Stratergy’ – An acre to cash crops, an acre to fruit growing, an acre to animal husbandry, and an acre to growing food crops.

I find the strategy simple, and easy to implement. At a time when people’s energies are getting focused on this simple campaign, someone should not throw spanners into the works. You will only make things more complicated.

The problem I see in this rather absurd development is that these kinds of taxes are decided on by wealthy people who live in Kampala completely unaware of the appalling living standards of people in rural places.

Focusing on the importers of the agro inputs and equipment and failing to bring into picture the end-users to whom the tax will be passed on, is a huge oversight. Idi Amin rightly observed that the problem with Uganda’s policy formulation is ‘too much book!’ I kind of agree with him.

Policy formulation in this country is sometimes detached from the practical challenges we are trying to solve as a country for the reason that it begins from above –in the boardrooms-rather than from the villages. We need to reverse this process if we are to get problem-solving approaches that are functional.

This is what I propose. If this country can give foreign investors tax breaks for a couple of years until when their businesses are stable and generating a profit, why does the government not extend the same break to an industry that employs the largest segment of its population (75%)?

The agricultural industry is still fragile and needs a couple of years before it can be slapped with taxes. It is only recently that we started seeing milk trucks in Uganda yet these trucks have been running on Kenyan roads for years. It is only recently that we started drinking juice made from Uganda yet other countries have been at it for a long time.

Imposing taxes at this time is premature, and a bit rushed. It is like having a chicken that lays one egg per day, and you decide to kill it so as to collect all the eggs at once!

The revised 2000 Poverty Eradication Action Plan (PEAP) and the 2000 Plan for Modernisation of Agriculture (PMA) are two good strategy documents that need to be part of the ongoing conversation about the proposed taxes.

PEAP (2000) prioritises agricultural modernisation as a national strategy out of poverty. PMA (2000) highlights the high cost of inputs and taxes as some of the factors constraining agricultural production in Uganda.

I reiterate my opinion that the proposed taxes on seeds, animal feeds, fertilisers, pesticides, hoes and other such agro inputs and equipment need to be put on hold for now. This will leave enough oxygen to a changing and expanding agricultural sector that is not stable and sturdy enough to shoulder the burden of taxes.

Writer is a Catholic Priest of the Congregation of Holy Cross

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