Parliament has revised and approved the new government tax measures with a blanket tax waiver to taxpayers in the country covering all the outstanding debts accrued before 2002. On Thursday, the House passed the Finance Bill, 2008 whose purpose among other things is to grant tax waivers of about Shs66.7 billion in outstanding tax arrears, interest, and penalties since June 2002.

“The proposal is important for improved tax administration and management as these tax arrears date back more than seven years and are evidently not performing,” Mr Gaudioso Kabondo, the chairperson of the Finance Committee of Parliament, said.
“In addition, the waiver will help with compliance and encourage taxpayers to clean up their books.”

The Finance Minister, Dr Ezra Suruma, told Parliament that most of the taxes cannot be recovered either because the taxpayers cannot be found or supporting documents were missing.
Under clause 3 (a) of the Bill which contains taxes charged on various transactions.

Parliament has maintained proposals by the government that taxes on registration of new vehicles should be increased by 200 per cent.

Parliament also agreed to increase the environmental levy on motor vehicles which are eight years old and above from 10 per cent to 20 per cent as a measure aimed at both protecting the environment and increasing domestic revenue.

“This will not only increase government revenue but it is also a cost effective measure to the owners of the vehicles to minimize the maintenance costs,” Mr Kabondo said.

The House further supported the government’s effort to conserve the environment by imposing an environmental levy of 5 per cent of Cost Insurance and Freight value (CIF) on worn clothes, worn shoes and worn articles. Members however noted that the majority of Ugandans were still poor and largely depend on secondhand clothes.

Parliament has recommended that the next financial year the tax on secondhand clothes should be reduced to 2 per cent down from the proposed 5 per cent. But in his response to the worn clothes, Dr Suruma said: “Our textile industry is struggling and they have made desperate appeals to us to help protect them from competition from outside.”

He added: “We would have wished to raise the tax on secondhand clothing even higher but we recognize that it is a politically charged matter and that it may not be wise to raise tax more significantly.”
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