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Uganda: Legislators Revise Tax Law Proposal on Parliamentary Allowances

(Apr. 25, 2016) On April 14, 2016, Uganda’s legislature voted to amend the country’s proposed law on taxation. The change will revise the Income Tax (Amendments) Bill, 2016, to exempt from taxation some payments made to legislators. (Yasin Mugerwa, Ugandan MPs Amend Income Tax Law to Secure Tax Exemption, KFM (Apr. 15, 2016), Open Source Center online subscription database, No. AFR2016041842640657; The Income Tax (Amendment) Bill, 2016, PARLIAMENT WATCH UGANDA (last visited Apr. 18, 2016).) The amendment could result in a loss of potential revenue in excess of Shs40 billion (about US$411.8 million) to the Ugandan treasury. (Mugerwa, supra.)

Background

In February 2016, Uganda’s Commercial Court issued an order for taxes to be deducted from the allowances paid to the Members of Parliament. The decision, rendered by Justice Henry Adonyo, would have imposed taxes on a variety of payments made to the legislators, including basic pay, mileage and constituency allowances, and allotments for expenses during committee sessions. (Urn, Uganda: MPs Amend, Pass Income Tax Bill to Exempt Selves from Taxes, OBSERVER (Kampala) (Apr. 15, 2016).) The Parliamentary Commission appealed the decision on February 22, but the vote in Parliament occurred prior to any hearing being held on the appeal. The Commission is the body that, among other duties, appoints, promotes, and exercises disciplinary control over “persons holding public office in Parliament.” (Mugerwa, supra; Parliamentary Commission, Parliament of the Republic of Uganda website (2015).)

Reaction

The revision is expected to be met with criticism as it comes at a time when the government is actively working to encourage tax payment by Ugandan citizens. Civil society organizations, including the Civil Society Budget Advocacy Group, recently condemned the move, having advocated the taxing of legislators. (Mugerwa, supra, Urn, supra.)

The State Minister for Finance, David Bahati, defended the legislation, noting that the Members had agreed to have their basic salaries taxed, with the exemption applying only to other allowances, and that it would not benefit current Members, but would apply to the next Parliament. (Urn, supra.)