UGANDA – Two ministers in the ministry of Health on Wednesday evening ganged up against the Minister of state for Planning, David Bahati, to defeat a proposal to scrap and reduce taxes on sugar confectioneries and non-alcoholic drinks.
The Minister of Health, Jane Ruth Aceng, and her deputy, Sarah Opendi, put up a spirited fight before parliament’s Finance committee in a bid to keep the 20 per cent excise duty on chewing gum, sweets and confectionaries.
This was after the ministry of finance proposed in the Excise Duty Amendment Bill 2017 to scrap the levy.
The bill, tabled by Bahati, also proposed that a 13 per cent (or Shs 240) charge per litre is imposed on sodas under non-alcoholic beverages, apart from fruit or vegetable juices.
Pegging her explanation on the growing burden of non-communicable diseases (NCDs) such as diabetes, cancer and heart disease among Ugandans, Aceng urged the legislators to support keeping taxes on sugar confectioneries as part of a government effort to curb these diseases.
The minister said reducing taxes will encourage more consumption.
“Uganda needs to go back to the olden days when these things were luxuries. Those sweets and chocolates are what are causing us huge bills for dentistry,” she said, adding that sugar also causes obesity.”
COMMITTEE POSITION
In its own report, parliament’s Finance committee had recommended a three per cent reduction in the tax imposed on sodas to 10 per cent or Shs 157 per liter.
Committee chairman Henry Musasizi (Rubanda East) justified the recommendation, saying Uganda’s current tax rates on soda are the highest in East Africa, with Kenya charging seven per cent and Tanzania five per cent.
“This affects Uganda’s competitive advantage from the growth and investment point of view. In order to enable the sec- tor to attract investment and promote growth, the rate should be reduced,” explained Musasizi, who received the backing of Nathan Nandala-Mafabi (Budadiri West).
Mafabi said there was a lot of smuggling of low- taxed soda from Kenya. However, Opendi shot down Mafabi’s claims.
“There have been attempts by manufacturers to reduce tax and support the health sector through provision of equipment.
We rejected it last year and now they are hinging it on smuggling,” she asserted.
Bahati warned that reducing taxes on soda will erode government’s revenue generation efforts.
However, Bahati later agreed, albeit in a resigned tone, to retain the 20 per cent tax on confectioneries and asked the House to endorse the health minister’s proposals.
For alcohol, any brand whose local material content (excluding water) is at least 75 per cent will be taxed 30 per cent or Shs 650 per litre, compared to the Shs 700 which government had proposed.
Importers of undenatured spirits will face a 100 per cent or 2,500 per litre tax while those made from locally produced raw materials will be charged 60 per cent.
Other spirits will pay an 80 per cent tax while a 60 per cent or Shs 1,860 per litre tax has been maintained for malt beer.
May 12, 2017: The Observer
