MPs reject ban on importing old cars, taxes on SACCOs

Members of Parliament on the finance committee have rejected government's proposal to reinstate the 30% corporation tax on SACCOS.

The proposal by government to reinstate taxes on SACCOS caused a public uproar from various SACCOS, civil society groups, and legislators.

Many MPs vowed from the onset that they would not approve the proposal, because it would be going against the decision Parliament made last year, to exempt SACCOS from paying taxes for a period of 10 years, as one of the ways to empower Ugandans economically.

In proposing reinstating taxes on SACCOS, the Government had intended to generate a total of sh10b. 

The committee, which is mandated to scrutinise tax proposals, also rejected the government proposal to ban importation of cars 8 years older and above.

The committee has however recommended that importation of cars which are 18 years and above should be phased. There has not been any limit on the age of cars imported to Uganda.

The committee further proposed that the ban on older cars be implemented in a phased manner, by reducing the limit by two years every financial year.

In their deliberations, the legislators agreed they could not ban old cars which Ugandans can afford, yet government imposed exorbitant taxes on new cars, making them very expensive.

While appearing before the committee about three weeks ago, Associated Motor Dealers, the umbrella group of car importers, told legislators that taxes levied on new cars in Uganda, are twice those levied on new cars in Kenya.

Commenting on the decision by the committee on Thursday, Associated Motor Dealers secretary general, Marvin Ayebale said: "To us, that is fair enough. It is similar to what we had proposed when we appeared before the committee. We had also proposed the ban on old cars to be implemented in a phased manner."

Ntenjeru North MP, Amos Lugoloobi, one of the finance committee members who vehemently opposed the ban on old cars, argued that it would cause government a revenue loss of sh182b.

The dealers argued that if the ban is approved by government, it would not only make government lose sh182b in taxes but will also cause the collapse of businesses that depend on importing used cars.

Sources in the committee revealed that most of the legislators have approved the other categories of taxes the Government has proposed, which among others include taxes on the usage of social media, taxes on beers, agricultural supplies/produce, cooking oil and fuel.

In the various tax proposals for the 2018/19 financial year, government intended to raise a total of an extra sh800b.

Out of the total budget of sh31trillion, government expects to get a total of sh16trillion from domestic revenue collections.