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 Developing economist Fred Muhumuza addressing participants during the meeting on Economiv Partnership Agreements at Piato Restaurant in Kampala.

Ugandan manufacturers should get worried of increasing number of imports from Asian countries instead of worrying about the Economic Partnership Agreements between the European Union (EU) and the East African Community (EAC).

Uganda and other EAc countries have been discussing the EU-EAC-EPA agreements for the last 12 years; some are not convinced that its a good deal like Uganda while Kenya has already signed partly to secure markets for horticulture products. 

EPA flowers

A rose flower farm in Kenya. The EU accounts for 31 per cent of Kenya’s export market, especially for cut flowers, tea, fresh vegetables and coffee. The EPA deal is expected to ensure continued duty-free and quota-free access to the EU for all EAC exports.

A United Nations think-tank has warned the East African Community against entering into an Economic Partnership Agreement with the European Union arguing that it will neither spur economic growth nor bring wealth to the region’s citizens.

The United Nations Economic Commission for Africa (UNECA) says in a report that if the EPA is signed, local industries will struggle to withstand competitive pressures from EU firms, while the region will be stuck in its position as a low value-added commodity exporter. “If the EAC-EU EPA is fully implemented, the region risks losing trading opportunities with other partners, industrial output, welfare and GDP,” the 45-page report seen by The EastAfrican says.

The report titled Analysis of the Impact of the EAC-EU Economic Partnership Agreement on the EAC Economies is yet to be made public and is expected to be discussed by the Council of Ministers in the “days to come,” according to sources at the EAC Secretariat. The report, commissioned by the EAC Secretariat, is likely to further polarise the position of the Community’s members on the EPA, which Kenya and Rwanda have already signed. 

SEATINI-UG alongside members of the Tax Justice Alliance including, Oxfam, Civil Society Budget Advocacy Group (CSBAG),Uganda Debt Network(UDN), Action Aid Uganda (AAIU), Citizens Watch-Information Technology (CEW-IT), Women and Girl Child Development Association (WEGCDA) and Inter University Tax Justice Forum, issued a press statement  at SEATINI Uganda offices in Kampala this 21st April 2017 to present observations and recommendations in respect to the tax measures that were presented to Parliament.  

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SEATINI-UG with other CSO members holding a press conference on 21/04/2017.

The Minister of Finance Planning and Economic Development developed and presented the tax revenue measures for FY 2017/18 contained in the Excise Duty (Amendment) Bill 2017, Value Added Tax (Amendment) Bill 2017, The Income Tax (Amendment) Bill 2017 and the Tax Procedures codes Bill, 2017. For the first time, we have observed that the bills were submitted along with certificates of financial implication, a practice that we commend.

As of half year of the FY2016/17, Uganda has revenue shortfall of UGX 166.44bn partly coming from the customs shortfall of UGX 206.58bn and an offset from the domestic side over performance of UGX 40.14bn. Tax revenue for the FY2017/18 is projected to be UGX 14,682bn. (87.9% of total revenue and grants – 16,698bn) which is 16.9% increase from the FY2016/7 estimates. Uganda Revenue Authority collections for 2017/18 are targeted at about 14.5trillion. This will need concerted efforts from all entities in Uganda including citizens.

Among the proposals, CSOs welcomed the following tax proposals to improve revenue collection and facilitate investment in the FY 2017/18 and beyond including; An increase of Excise Duty from UGX50, 000 to 55,000 per 1000 sticks (soft cup) for cigarettes will increase revenue, 60% proposed tax on malt beer or 1860 per litre, whichever is higher under the excise duty (amendment) bill, lotteries and Gaming Act, 2016, the inclusion of another categorization for the fruit juice and vegetable juice, except juice made from at least 30% of pulp from fruit and vegetables grown in Uganda will encourage our home industries and strengthen the Buy Uganda Build Uganda policy as well as boost the agriculture sector,  withholding tax rate applicable to winnings from sports betting and pool betting of 15% is commendable, increase on imported furniture and furniture assembled in Uganda from 10% in FY2016/17 to 20% FY2017/18 to encourage local production.

However there were a number of concerns raised by the CSOs. Among them was the issue of tax exemption given to Bujagali dam. A question arose as to whether there will be reduced power tariffs to the benefit of consumers or instead the burden will befall the tax payer!