Graduated tax to be suspended for 10 years

May 07, 2004

Graduated tax will be suspended for a 10-year period, starting next financial year 2005/2006

BY VISION REPORTER

Graduated tax will be suspended for a 10-year period, starting next financial year 2005/2006, the Vice President, Prof. Gilbert Bukenya, told local government leaders yesterday.

Local governments will, therefore, continue collecting the tax from bonafide taxpayers until July 2005 when the proposal is to be implemented, the Vice President’s office said yesterday.
Bukenya met with district chairpersons and mayors at his Kakiri home on Thursday and said the suspension was aimed at mobilising households to increase production so that they are taxed equitably in future.

“For this year, local councils will collect the tax to be able to carry out their planned activities while government sorts out the modalities of implementing the proposal. But it should also be understood that the tax has not been abolished. It is only being suspended for that specified period,” Bukenya said.

During the next 10 years therefore, we need to mobilise our people to raise a minimum income of at least sh10m in each household so that in future when the tax is re-instated they are equitably taxed,” he added.
He emphasised that the tax was only being suspended, rather than being abolished, and urged local leaders to identify avenues through which people will be empowered to improve household incomes.

Uganda Local Authorities Association chairman Capt. John Emily Otekat, who is also the Soroti LC5 chairman, raised concerns that the suspension of the tax would affect district incomes.
“Graduated tax forms 80% of revenue for local councils and brings in about sh70b a year for local governments in the entire country. If suspended, activities of local governments are going to be drastically affected unless the Government comes up with a viable way of filling the gap,” Otekat said.

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