Parliament on Tuesday defied President Yoweri Museveni’s directive to have the Income Tax (Amendment) Bill, 2016 amended to allow MPs’ allowances to be taxed.
“The Committee recommends that the Tax Bill be passed in its current form, and be sent back to the president for assent,” Henry Musasizi, the chairperson Parliament committee on Finance stated in his report to the House.
The bill had been returned by the president for reconsideration of Clause 21 that exempts income of MPs, except salary, from tax.
#PlenaryUg The Finance Committee recommended that the Income Tax(amendment) BIll be returned to the President for assent its current form
— Parliament of Uganda (@Parliament_UG) November 15, 2016
In a session presided over by Speaker Rebeccas Kadaga, the parliamentarians went ahead and passed the bill without amendment.
On May 2, 2016, the President wrote a letter to speaker Kadaga, rejecting the Income Tax (Amendment) Bill 2016 in which MPs exempted themselves from paying tax.
The president noted that tax exemption for MPs would affect revenue collection if the government is to meet its ambition of transforming Uganda into a middle income country by 2020 as well as meeting the short term demands for infrastructure development and social services.
“I do not support the decision of Parliament and I am accordingly returning the Income Tax (Amendment) Bill for reconsideration by the House,” Museveni noted in the letter.
The decision by MPs to exempt themselves from taxation stirred public outcry where many accused the MPs of being insensitive to the priorities of the country and the general economic condition of the citizenry.
The civil society organizations, through their umbrella body, Civil Society Budget Advocacy Group, (CSBAG) collected over four million signatures, asking the president not to assent to the Bill
In April, Parliament had passed the Income Tax (Amendment) Bill 2016 and decided to amend Section 21 (1) of the Income Tax Act, Cap 340, to exempt the employment income of members of Parliament, except salary, a decision that provoked public outrage.
House united on tax bill
On Tuesday, considering the motion for a resolution of parliament to reconsider the bill, the MPs across the political divide rejected the amendment of section 21 (1) of the Bill, saying their salaries are already being taxed, adding that there is no need for further taxation.
In their report to the House, the committee observed that there is a misconception by the public that MPs don’t pay taxes, which he said is not true, adding that MPs are heavily taxed.
Appearing before the committee recently, during consultations on the Bill, the Parliamentary Commission recommended that the Bill is rejected by the House, and be returned to the President without any amendment.
The Commissioners, who included Peter Ogwang and Arinaitwe Rwakajara, told the committee that each MP is taxed Sh3.5m monthly by the Uganda Revenue Authority (URA).
“The assertion that MPs don’t pay taxes is not true. There is no way you can give me money for fuel, and you again want to tax it. It would be double taxation. MPs pay taxes, and these returns are with URA,” Peter Ogwang said.
Letting the bill pass, Speaker Kadaga, said the Bill had been fully debated by the House during its initial consideration by parliament.