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City traders may pay dearly over tax standoff

By Vision Reporter

Added 24th August 2005 03:00 AM

SPECIAL REPORT

Import traders have threatened to suspend activity to protest over new higher taxes, which they warn could put them out of business but which analysts say are necessary to nurture local industry.

SPECIAL REPORT

Import traders have threatened to suspend activity to protest over new higher taxes, which they warn could put them out of business but which analysts say are necessary to nurture local industry.

SPECIAL REPORT

By Peter Kaujju

Import traders have threatened to suspend activity to protest over new higher taxes, which they warn could put them out of business but which analysts say are necessary to nurture local industry.

Speaking to Daudi Migereko, the Minister of Tourism, Trade and Industry on Monday, the traders claimed that Uganda Revenue Authority (URA) had hiked taxes in the last three weeks and meeting the tax obligations as stipulated would mean surrendering their working capital to the tax body. “Recently, URA increased the tax on imported goods to unsustainable levels.

“For instance, taxes on a 40ft container of sandals has increased to sh60m from sh15m, a 40ft container of shirts increased to sh80m from sh20m, while a 40ft container of trousers has increased to sh160m from sh35m following a circular by URA on August 18,” said Issa Ssekito, the spokesperson for Kampala City Traders Association (KACITA) said.

Ssekito said, “if nothing is done, we shall request all traders to stop lodging tax entries with URA for a specified period, call off the importation of goods or advise traders to re-export until our complaints are addressed.”

He said KACITA had on Wednesday instructed its loyal members not to import anything until their demands were met, a move, which may cause shortage and loss of revenue to the Government.

The traders also accuse the Government of not addressing most of their problems like the continued poor application of the Common External Tariff especially on rice, existence of road blocks and lack of a proper water transport system that culminated into closure of their businesses in April.

A top bank manager said high import taxes would have adverse effects because they will be passed onto consumers in form of high prices.

“High import taxes will affect consumers in form of high prices.
“But the Government does not just come up with figures. There is research before fixing taxes and the implications are well known,” said the source.

However, Allen Kagina, URA’s Commissioner General, said they were committed to having a smooth relationship with taxpayers but also have an obligation to fight tax evasion.

“URA is committed to having a good relationship with taxpayers but some of them do not comply. We have not increased the taxes as they claim but are only implementing the actual value of the products.

“Some connive with suppliers to undervalue their products and even forge invoices.

“For example, we intercepted blank invoices with stamps and signatures recently,” Kagina said.

Observers say these are the necessary pains Uganda will have to go through if it is to transform into an industrial economy.

“The Government should stay the course. There is no way you are going to encourage local industries if imported clothes, shoes and rice are cheaper than the locally produced stuff,” a senior government economist said.
“If the politicians mean what they say, they should not back down.
“Let them stop importing and we see who blinks first,” the economist said.

City traders may pay dearly over tax standoff

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