Budget Will Not Be Passed If We Pay Income Tax – MPs

Mr Keith Muhakanizi for “poking his nose in matters that do not concern him” and put the country on notice that if President Museveni does not approve their tax exemption law, they will not pass the 2016/17 budget.
Addressing a news conference in Parliament yesterday, Mr Peter Ogwang (Youth Eastern) and Mr Henry Musasizi (Rubanda East) warned civil servants like Mr Muhakanizi, who this week condemned their tax exemption deal, that they are also waiting for them in Parliament during the consideration of the Auditor General’s reports.
“We cannot pass the budget until we are sure that our amendment to Income Tax Bill has been concluded,” Mr Musasizi said. “In case the President does not sign the Bill, it will still come back to the same people in Parliament. These are hard facts. We will still pass it without fear or favour.”
The MPs also took shots at civil society groups which are raising public awareness over the controversy.
“The public should be with us in the struggle to facilitate MPs. We need facilitation to go to our constituencies because a Member of Parliament without money cannot have confidence. But there is an option, if they want us to drop the amendment, the government should give us Shs30 billion in additional funding to cater for increased salaries and benefits for Members of Parliament,” Mr Musasizi said.
Mr Musasizi, who moved the amendment to the Income Tax law, also revealed that what he did had the backing of the President.
“We agreed with the President in the [ruling party’s parliamentary retreat in] Kyankwanzi that we should not increase our salaries and benefits but tax on our allowances should be lifted to maintain the status-quo,” he said.
Although it’s not yet clear whether the MPs views on the disputed tax exemption is the agreed position of other members, government officials yesterday accused MPs of “blackmail” and reacted to their plan with consternation, reminding the politicians that they were not elected to Parliament to demand tax exemptions.
“They are hostage takers, they are not people’s representatives. They behave like gangsters but the President will not allow them to have their way,” said Uganda Media Centre boss, Mr Ofwono Opondo. “They are trying to nullify the court ruling but the President will not allow them to do so. We did not elect MPs to demand tax exemptions.”
He added: “In any case, they are the ones who have been calling stakeholders to give their views on Bills how come when it came to exempting their allowances, Ministry of Finance, Uganda Revenue Authority and the civil society were not consulted”
Last evening, Mr Muhakanizi was in combative mood, telling MPs to “shut up”. He reiterated his position on Monday, which stated that the first principle of taxation is equity and that “we need to pay taxes to increase the tax contribution to GDP from 13 per cent to at least 18 or 20 per cent”.
Mr Muhakanizi warned that it’s wrong for people in authority to use their positions to dodge taxes.
The Ministry of Finance spokesperson, Mr Jim Mugunga, emphasised that Mr Muhakanizi made a statement of fact and that he should not be used by MPs to divert attention. “He [Muhakanizi] said it’s important for taxpayers of all colours and ranks to pay a fair share of their tax obligation. He did not blackmail MPs at all and that has never been his work method,” Mr Mugunga said.
“On the contrary, if it’s true that a section of MPs are threatening not to pass the budget unless allowed an unfair tax regime, then it’s them who are blackmailing the nation. The budget is not a Muhakanizi document but revenue and expenditure account that belongs to Ugandans.”
Mr Ogwang and Mr Musasizi who insisted they pay about Shs3.3m as Pay-As-You-Earn (PAYE) tax every month, had said at the press conference that it’s not the Secretary to Treasury’s role to communicate government positions and that his minister (Mr David Bahati) was in Parliament during the passing of the disputed amendments and did not object to the proposal. Mr Musasizi came with his pay slip for March to prove that he is paying taxes.
“As Parliament, we make laws and if the law is not favourable, we have the powers to amend. Therefore, it’s within our powers to amend income tax law. Since some people were refusing to understand, we decided to remove our allowances from the taxable income,” Mr Ogwang said.
“We pay taxes but they are maligning us and blackmailing Parliament. The likes of Muhakanizi should know that we are going to leave no stone unturned when it comes to scrutinising Auditor General’s reports,” the legislator added.

The background

A decision by legislators to exempt their allowances from income tax has sparked public outrage with constituents disparaging them as “greedy”. The Civil Society Budget Advocacy Group (CSBAG) and other NGOs have asked the President not to sign the Income Tax (Amendments) Bill, 2016. Trouble started when the Parliamentary Commission decided to consolidate members’ pay apparently to help MPs pocket a bigger pension and gratuity after retirement. However, this consolidated pay structure (salary and allowances) attracted the attention of the revenue authority which slapped a higher PAYE bill on it. Parliament has also appealed a decision of the Commercial Court on the same matter. The court on February 2 ordered the Parliamentary Commission to deduct tax from MPs’ emoluments dating back to 2004. This judgement infuriated MPs after they realised that they each will have to cough up to Shs9 million in PAYE.