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Experts welcome tax waiver on agricultural inputs

Agriculture is expected to be an anchor for growth as other sectors especially services and industry recover from battering by coronavirus crisis

Kampala, Uganda | THE INDEPENDENT | The move by the government to waive taxes on most agriculture products has been welcomed as a positive step.

Finance Minister Matia Kasaija is expected to announce the removal of the 18 percent value-added tax (VAT) on all the tools used in the garden when he reads the  2020-2021 financial year budget on Thursday. The tools include hay mowers, slashers, rakes and tedders.

Others are crop sprayers, hay and straw baler, tractor mounted scrapers, blades & dam scoops, root or tuber harvesting machinery and tractor mounted loaders. Also irrigation equipment, drinkers and feeders for all farm animals and tuber harvesting machinery will be exempted.

Dr Ezra Munyambonera, a research fellow at the Economic Policy Research Centre said the move is positive and will make an instant impact in the agriculture sector. He said many smallholder farmers could hardly use even the most basic tools because of their prices. Removal of taxes is a step towards making them affordable. Removal of taxes means farmers might get these tools at a much cheaper price than they are being sold currently.

Allan Mugisha, the executive director at audit firm Ernst and Young also spoke highly of the move saying that this would boost the sectors’ production. Hay mowers and straw balers will particularly be useful to cattle keepers who are struggling to preserve fodder for the animals during prolonged dry seasons.

Agriculture is expected to be an anchor for growth as other sectors especially services and industry recover from battering by coronavirus crisis.

On Monday, Uganda Bureau of Statistics (UBOS) said in a report on how sectors grew in 2019/20 financial year, that agriculture was better off than most sectors simply because much of it was not disrupted by the coronavirus prevention lockdown.

UBOS said the “gross valued added for Agriculture, Forestry and Fishing activities grew by 4.2 percent in 2019/2020 compared to the growth of 5.3 percent registered in 2018/19.”

The statics body said the performance in Agricultural activities is largely attributed to the good performance in food crop growing activities which registered a growth of 4.3 percent in 2019/2020 when compared to the 1.5 percent growth in 2018/19.

Livestock activities grew by 7.7 percent in 2019/2020 up from 7.3 percent in 2018/19, registering the most robust growth with the agriculture sector. The fishing activities were the most hit with their growth dropping from 41.1 percent growth in 2018/19 to just 1.6 percent in 2019/2020.

This led to slower growth in the Agriculture sector during the FY 2019/2020, UBOS said. Coronavirus has seen fishing exports drop by three quarters. Removal of taxes is expected to cushion the sector and push up production even as the sector suffers low demand due to lockdown measures.



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