Government targets Shs 16 trillion from domestic revenue
Government is targeting to collect Shs 16.2 trillion from domestic revenue to spur development in the coming financial year.
This has been revealed by the minister of state for planning David Bahati while appearing before the finance committee of parliament to present tax bills for the financial year 2018/2019.
Bahati informed the committee that they are introducing withholding tax on commissions by telecommunication companies to mobile money and airtime agents, and also enforce a one percent tax on persons engaged in agriculture.
Bahati adds that they are also planning on imposing excise duty on social media of Shs 200 per day, Shs 200,000 on the registration of motorcycles at first registration, increase charges on mobile money and all bank charges from 10 to 15 percent.
“We are imposing tax on juice, Shs 200on cooking oil, tax on beer, spirits, kibuku and Shs 100 per litre on both diesel and petrol which will be used to improve infrastructure.” He said.
Meanwhile MPs have accused the Ministry of Finance, Planning and Economic Development for drawing tax policies that are shielding commercial banks, at the expense of other financial institutions.
The complaints were raised yesterday by Henry Musasizi, the Chairperson of the Finance Committee at the same meeting.
Musasizi said the Ministry was sidelining telecom companies dealing in mobile money and savings and credit organisations (SACCOS).
“The tax policy engagements you have brought here, especially on banks seem to target anyone in the financial business other than commercial banks. mobile money, SACCO you are putting tax. Why do you seem to be inclined to be creating a favourable environment for commercial banks against other agencies involved in the financial sector?” he said.
Musasizi, said Government is intending to put in place proposals that constrain other sectors from operating in the financial environment.
Bahati however declined to comment on the matter but promised to return to Parliament with a written explanation on why the new tax proposals are hell bent on smothering other financial players.
The tax reforms have proposed an increased excise duty on mobile money and bank charges from 10% to 15%, which new changes are expected to raise Shs 45bn in revenues.
Still in the new tax reforms, Government has proposed to introduce 10% final withholding tax on commissions by telecommunication companies to mobile money and airtime agents as a final tax and the Ministry of Finance has projected that the new taxes will raise Shs 11.3bn.
There is also a proposal to reinstate corporation tax on SAACOs, with the hope that the move will raise Shs 10bn.
In terms of excise duty, Government intends to harmonise excise duty of 12% on all telecommunication services (phone talk time on mobile phones, land lines, value added services raise Shs 30bn.
While a levy of 1% has been put on Mobile Money, and Government expects to collect Shs 115bn as well as another daily levy of Shs 200 on OTT (social media WhatsApp, Facebook) raise Shs 284bn.