Today the Session began at 10:00 am with the Speaker Rt. Hon Anitah Among Chairing. In her communication, she said, “We shall have the reports on Coffee and Naguru. However, I have heard that some members are going to demonstrate against the Coffee Report. If I see the demonstration, I will drop the report. We are legislating for our people”, she warned. She also said she had looked at the Uganda Revenue Authority Report on the URA Amendment Bill 2022 and said there was a need for a comprehensive amendment of the URA Act. “You don’t just smuggle in one item”, she said. Following this, the Minister of State for Finance (General Duties) Hon. Henry Ariganyira Musasizi moved to withdraw the URA Amendment Bill 2022 and the House approved his request. He promised to expeditiously work on the amendments and have the report re-tabled in the house soon.
The House thereafter went on to consider the Income Tax (Amendment) Bill, 2022. The object of the bill was to revise the definition of “exempt organisation”, revise the tax rate applicable to individuals and companies for purposes of rental income; provide for a ceiling on deductible expenses on rental income for non-individuals, and to provide for the extension of the tax holiday for Bujagali Hydro Power Project for five years among others. Hon. Jane Avur Pacutho the Vice-Chair of the Finance Committee presented the Report (attached) of the Finance Committee on the Income Tax (Amendment) Bill, 2022.
The Committee recommended that the proposal by the Uganda Revenue Authority that motor vehicles aged 9 years and older from the date of their manufacture be compelled to have their final clearances done at the port of entry should be deferred to 2023/24 when the economy is fully opened. The committee further recommended that the exercise should be undertaken in a phased approach with the first year targeting vehicles 15 years and older.
The consideration of the Income Tax (Amendment) Bill, 2022 was stayed temporarily to allow a small team of MPs selected by the Speaker to harmonise positions between the main and minority reports. Thereafter, Hon. Muwanga Kivumbi presented the Minority Report (attached) of the Committee on Finance, Planning and Economic Development on the Income Tax (Amendment) Bill 2022. After the presentation of the Minority report, the Speaker selected a few MPs (from the Opposition and Government side) led by Hon. Nandala Mafabi to go and harmonize positions in the main and minority reports before the Income Tax (Amendment) Bill, 2022 is passed.
Later the Chair of the Finance Committee, Hon Keefa Kiwanuka presented the report (attached) on the Excise Duty (Amendment) Bill, 2022. The bill sought to amend the Excise Duty Act, 2014, to provide for the definition of ‘fruit juice’, ‘un-denatured spirits’ and ‘vegetable juice’, amend Schedule 2 to vary the excise duty in respect of opaque beer, fermented beverages and plastics, provide for an incentives regime for citizen and foreign investors whose investment capital is US$5 million and US$35 million respectively among others.
The committee learnt that one of the companies in the alcohol sector innovated and set up a “Chibuku” factory which unfortunately closed in 2018 over unprogressive excise duty on opaque beer. The unprogressive tax on opaque beer rendered Chibuku uncompetitive with other local brews such as tonto, ajono, mulamba, malwa, kwete among others. Due to this, annual VAT worth UGX 5 billion was lost, an average of 3.6 million kgs of maize. Over 1,000 farmers supplying maize lost market, as well as 6,000 direct and indirect jobs linked to the factories were lost. The Committee therefore recommended a reduction in the Excise Duty on opaque beer to 10 per cent or UGX 100 per litre whichever was higher. The bill also proposed a 20% duty introduced on Sweets, Chewing Gum, Chocolates and other confectioneries.
Hon. Muhammad Nsereko (Kampala Central, Indp) on his part proposed that Excise Duty on motor-spirit gasoline which stood at UGX 1,450 be reduced by UGX 750. “Reduction in fuel is the only remedy available to reduce the cost of living. Reduction of taxes on fuel shall force the price to go down”, he said. However Hon. Geofrey Ekanya (Tororo North, FDC) disagreed. He said that even if we brought down the cost of fuel by UGX 500, the fuel dealers would hoard it and the prices would stay high. “These dealers are making abnormal profits. We need the Attorney General to bring a competitions law and we handle this once and for all”, he said.
On his part, Hon. Solomon Silwany, (Bukooli Central, NRM) said the taxes on alcohol should not be reduced saying they are luxuries. He said, “Alcohol is an inelastic product, at whatever price, the demand of alcohol is the same. “Even if you put the beer at UGX 100,000 per bottle, the people who drink beer will still buy beer”, he added. He further said that alcohol is an an addictive product where the government should be able to get a lot of taxes, especially from people who drink and become a problem in society.
The house later went on to consider the Excise Duty (Amendment) Bill, 2022 at Committee stage where the bill is scrutinized clause by clause. The house later passed the Excise Duty (Amendment) Bill 2022 with amendments.
Later the House went on to receive a Motion for Adoption of the Report of the Sectoral Committee on Tourism, Trade and Industry on the Investigation of the Alleged Unfair Terms in the MOU between the Government of Uganda and Uganda Vinci Coffee Company Limited (UVCCL).
The Committee found that the grant of the tax waiver to UVCCL under the Income Tax Act was irregular and illegal since the provision of the law under which the waiver was granted did not apply to UVCCL at the time of grant. The Committee noted further that, the VAT Act does not grant any person, not even the Minister, the right to waive a tax. In that regard, therefore, the Minister acted irregularly and illegally in granting the VAT exemptions to UVCCL.
The Committee observed that Article 8 of the Constitution was infringed upon by the Agreement when the execution of the Agreement was concluded without the input of coffee farmers, who were the owners of the coffee beans which were being granted to UVCCL in the Agreement. The Committee further observed that the non-consultation of coffee farmers, who number about 12 million, was contrary to Article 8A, which entrenched the democratic principle of consultations in our constitution. The Committee observed that allowing UVCCL to determine the price for coffee beans not only contravened the provisions of the National Coffee Act but also amended, by infection, the price determination mechanisms prescribed by law.
The Committee further noted that sections 4 and 5 of the Value Added Tax Act, Section 4 (1) of the Excise Duty Act, 2014, section 7 of the NSSF Act, sections 54 and 59 of the Uganda Citizenship and Immigration Control Act Cap 66 and section 80 of the Local Government Act Cap 243 contained provisions that granted tax waivers and waivers to various impositions to Uganda Vinci Coffee Company Limited without lawful authority.
The Committee recommended that the government should consider extending appropriate incentives to the already existing 47 local companies that were doing value addition. It noted that there was an urgent need for a Competition Law to promote vigorous competition and prevent anti-competitive business practices. The committee further recommended that the officials who committed Government to such illegalities should be penalized as a deterrent mechanism to stop similar occurrences in future.
The Committee concluded that the Attorney General, Kiryowa Kiwanuka failed to carry out an appropriate legal due diligence in the exercise of his statutory functions under article 119 (4) (b) of the Constitution to draw, peruse through and approve the agreement between the Government of Uganda and Uganda Vinci Coffee Company Limited in spite of the agreement containing provisions infringing the Constitution and various other laws.
The Committee finally directed the government to terminate this agreement of the Coffee Deal between the GOU and Vinci Coffee Company and report to Parliament, within 6 months from the date of adoption of the Committee report.
Thereafter, the debate on the report of the Trade Committee on the MOU between the government and Vinci company ensued. In response, Hon. Nandala (Budairi West, FDC) said, “The presiding officers are not needy. The people of Uganda should learn to vote for people who are not needy. If the members of the committee were needy, there would have been a problem”. On his part Hon. Abed Bwanika (Kimaanya-Kibonera Division MP, NUP) said that it was wrong for the Gov’t to commit to Ugandan coffee without consulting the farmers and other stakeholders. When Hon. Lillian Aber (DWR Kitgum, NRM) weighed in on the ongoing debate of the Coffee Deal Report, some drama ensued when some MP wanted to grab the microphone from her for defending the Coffee Agreement. Hon. Eddie Kwizera (Bukimbiri County, NRM) on his part said that coffee was owned by the people of Uganda and thus the Government did not have a tradable commodity meaning it cannot sell what it doesn’t own.
On his part, Hon. Muwanga Kivumbi said, “We need to define who an investor is in this country. Somebody comes here with nothing, we give you land, water, tax holidays, free electricity, and contingency liability to go and borrow. Is Uganda the investor or those people? ” He further said, “This thing of exemption; It is high time that we had a comprehensive review on all exemptions so that we see a way forward”. He went on to ask, “Who is this Pinetti, we have been told she has gone to Sango Bay, the same woman is in Lubowa and we have been told the same person is in roads. What is so special about this person?”
On his part, Hon. Mathias Mpuuga the Leader of Opposition said, “We demand that the Attorney General lays all the Public-Private Partnerships before Parliament and we look at the undertakings by the government on behalf of the people of Uganda. In response, Attorney General Kiryowa Kiwanuka said, “We shall take the recommendations and review them and report back to Parliament as required on the actions in respect to the report.
The House finally adopted the report of the Trade Committee on the coffee with all the amendments proposed by the MPs.
Thereafter, the Plenary was adjourned to Thursday, 19th May 2022 at 10:00 am.