Ugandan MPs refuse to pay tax

In February, the High Court ordered that all emoluments paid to MPs would be subject to the same tax system applied on the rest of the Ugandan citizens. The decision from has caused a controversy amongst MPs who passed a tax exemption law in order further enjoy tax reduction.

The High Court directed the Parliamentary Commission to start collecting the tax and recover arrears from since 2004. The Income Tax Act forces MPs to pay tax in a monthly Pay as You Earn  [PAYE] from salaries. Finance and Uganda Revenue Authority [URA] have insisted that it would tax the MPs on all sums it earned. This angered MPs who as a counter response passed a controversial income tax bill that exempted their allowances from being taxed on the ground that it is not an income earned. The income bill created an unusual collaboration as both MPs from the ruling party and opposition came together to fight the new taxation system. The MPs argued that they only want their basic salary to be liable to tax as now. This excludes most of the profit they earn.

URA's public and corporate affairs officer, Sarah Birungi Banage explained that the MPs "salary (taxable income) was small [about Shs2.6m] and their reimbursements [the allowances] was not subjected to PAYE because the two were separate. "But when you consolidate the two, you end up with a flat figure and that raises the tax component. They did their thing but for us we are following the law." 

State Minister for Finance (Planning) David Bahati who presented the bill explained that the “amendment has been an adjustment to exclude some of the facilitation allowances for constituency but we have maintained that MPs should pay taxes on their salary. So what has been excluded is the issue of facilitation allowance. This is not an income to an MP, it is just money to go to work but the income for the MP pays tax and we are not going to compromise that", Bahati told AllAfrica

The government looks to an increased income of around Shs49.2 billion additional revenue annually if the new taxation system goes through.

Sarah Achieng Opendi, The Minister of State for Primary Health Care, believes that the new taxation system can improve Uganda’s political goals. “There are many unfunded priorities to be sorted. By not taxing MPs’ allowances, it only means that these gaps will not be filled easily. Government will lose money which can fill some of these gaps,” she told NTV TV station.

The parliamentarians excluding themselves from tax has sparked massive critics in the country. Forum for Women in Democracy [FOWODE] has raised more than five million signatures from citizens across the country to protest against the MPs tax exemption. Civil society organizations under the NGO Teso Anti-Corruption Coalition [TAC] have further collected more than 5,000 signatures from all constituencies to petition President Museveni to not accept the tax-emeption. Samuel Arimon, the program officer TAC thinks the MPs are being selfish. “By acting that way, the parliamentarians have not represented the interests of the people” Many more stand critical to the MPs strategical move.

Akiiki Ben, a photographer in the Luwero district signed the petition. "I pay taxes on everything even a mere matchbox, but those earning millions of shillings are exempting themselves from paying, that is unfair. How can people, who few months back were kneeling for our votes, behave like this? I’m annoyed and looking forward to signing the petition." 

Karungi Prosy, an IT specialist, says that she understands why the MPs do not want to pay tax. "I’m not surprised the MPs are pulling such an act. They spend a lot during campaigns, so they want a refund."

Kenneth Beinobwegye, the head teacher of Kahugu Primary School, said he would willingly participate in any demonstration if President Museveni signs the Bill. "How can a teacher who earns only Shs300,000 a month, pay taxes and MPs who earn a consolidated sum of more than Shs25m not pay?" he wondered.

Keith Muhakanizi, the Secretary to the Treasury believes that the first principle of equity is taxation. “All of us must pay taxes. Our position as the Ministry of Finance is very strong - the principle of equity must apply.” 

The MPs claim that President Yoweri Museveni okayed the bill when they where in the caucas of the ruling party members, in Kyankwanzi. 

"The president asked us not to increase our salaries and allowances while in Kyankwanzi mid last month [March] and we agreed," said Rubanda East MP Henry Musasizi. "We said 'yes but we shall not pay taxes'. The president knows it and we believe by the end of this week he will have signed the bill. We want this status quo to be maintained."

The MPs also warned that if the president does not assent their tax exemption, they may block passage of the 2016/2017 budget. 

Text by...

Omukama Gilbert

For Omukama Gilbert, writing is the perfect way to express himself to the outside world and to let people know about Uganda.