The Dairy Development Authority has appealed to President Yoweri Museveni to reinstate the 1% cess levy on producers of processed milk and dairy products to enable it to meet its financial needs.

Under regulation 18 (sub-regulations 1- 4), DDA is empowered to levy, charge and collect a cess (tax charged over and above existing taxes) on processed milk and milk products that shall not be less than one per cent of the ex-factory price per litre or kilogramme of the milk or milk products as the case may be.

The regulation further provides for revision of the cess from time to time. However, in 2017, President Museveni suspended the collection of the levy and directed the finance ministry to compensate DDA for the above.

DDA executive director Samson Akankinza says if the levy is reinstated, the authority will be able to collect sh60b in revenue annually.

“With this money, we are able to reinvest it into the activities of the authority that requires funding. Unfortunately, efforts to have it reinstated have been futile. We have written to the Ministries of Finance and also Agriculture, but we have not yet received any response,” he said today via the phone.

According to the Auditor General’s report to Parliament, a review of the Authority’s revenue sources revealed that following the Presidential directive, the Authority was not levying and collecting Cess on milk or milk products and had also not received the due compensation from the finance ministry as directed.

According to Akankinza, to date, the compensation is now worth sh80b. 

“The limitation in the collection of cess revenue adversely affects the entity’s ability to undertake its mandate. Regulatory activities for example which have a bearing on the health and safety of the population are barely carried out as a result of limited resources. Further, inadequate funding negatively impacts the dairy sub-sector as quality right from the farm to the market may not be adhered to,” the auditors said.

The accounting officer told the auditors that the entity has followed up with the finance ministry for compensation of Cess revenue, but to no avail. However, he plans to meet the Parliamentary Committee responsible for agriculture to discuss the way forward.

Further, the Accounting Officer was of the view that if the ban is lifted, the authority will have a sustainable way of collecting more Cess currently projected at approximately sh60b than pursuing the unsustainable option of Cess compensation.