Parliament set to scrap taxes on agricultural inputs
The House is today poised to adopt a finance committee report that recommended that the proposed 18% Value Added Tax (VAT) on agricultural inputs and equipment be scrapped
By Umaru Kashaka
The House is today poised to adopt a finance committee report that recommended that the proposed 18% Value Added Tax (VAT) on agricultural inputs and equipment be scrapped.
While reading this year’s budget, finance minister Maria Kiwanuka proposed an 18% VAT on agricultural supplies such as hoes, fertilisers, seedlings and tractors in order to generate sh30.4b, about 0.2% of the entire budget.
However, the committee, chaired by the Kyadondo North MP, Kasule Sebunya yesterday evening presented its report saying the proposed taxes would kill the agricultural sector that is struggling with a meagre growth of 1.5% to increase the use of agro-chemicals, improved seeds and fertilisers.
“Application of VAT on agricultural supplies will make the situation worse, especially in rural areas and hinder the mechanisation of agriculture in the country,”Sebunya told the plenary session presided over by Deputy Speaker Jacob Oulanyah.
Oulanyah adjourned the debate on the committee report to today at 10:00am, but this was after allowing the shadow finance minister and Tororo County MP Geoffrey Ekanya to also present his minority report rejecting VAT on salt.
“Ugandans, especially in rural areas, will suffer from goiter disease because the new tax would make the salt inaccessible,” he warned.
In trying to preclude another move by the House to scrap their new tax measures for this fiscal year, the finance ministry is expected to put up a strong defence for this VAT, especially riding on the argument of broadening the tax base.
The MPs two days ago dropped the new tax of sh200 per litre on kerosene that was intended to raise about sh15b to roll out solar energy in rural areas.
There are fears that if Parliament rejects this 18% VAT, the government may not be able to generate the sh15 trillion needed to finance this year’s fiscal budget.
Also related to this story
Army to monitor distribution of agriculture inputs
Does taxing agricultural input in uganda make economic sense?