Tighten your belts, says Uganda’s new budget

June 13, left Ugandans bracing themselves for the impact a range of taxes the minister of finance, economic planning and development announced in the 2013/14 budget. The taxes are meant to close the gap donor aid cuts created. The donors cut foreign aid to Uganda protesting runaway corruption in public offices. In the end, the government has decided to burden the tax payers. It means more pain for Ugandans, as the Observer newspaper reported. 

Minister of Finance, Maria Kiwanuka, introduced new taxes on international phone calls, mobile money transfer charges, gambling, and restored value added tax (VAT) on hotel accommodation, wheat and flour, domestic water, etc. Taxes on fuel increased by shillings 50 and on kerosene by shillings 200. 

Uganda's Minister of Finance Maria Kiwanuka

The shillings 13 trillion (about $52 billion) budget, of which shillings 2.3trillion goes to the Works and Transport Ministry, takes effect this July. A new financial year for Uganda begins in July. As a tradition state governments plan their expenditure and income estimates for the year. For the 6^th year running East African Community countries read their national budgets for the financial year (FY) 2013/14 on the same day.

Those buying new cars and motorcycles will dig deeper into their pockets for an extra shillings 200,000 (about $80) and shillings 250,000 (about $100) respectively for vehicle registration number plates. 

My friends who feed on chapatti and beans (locally known as kikomando); which is common food for low income earners), those eating rolex (chapatti rolled on fried eggs), bread, etc. well tighten the belts, the 2013/14 budget introduced an 18% valued added of on wheat and flour. The tax on wheat means prices of bread and wheat related products will rise.

It gets even worse when more tax on fuel has been increased. An increment in fuel tax in this country means increasing the price of nearly everything. First, transport fares will be hiked. Second, traders will use this as an excuse to increase commodity prices. The farmer who is transporting the wheat and other crops to the market will justify his price due to high cost.

Already traders have been bemoaning the high cost of doing business in the country. It will get even higher. Given that Uganda prides itself in a Laissez-faire economy everyone will pretend all is normal.

Today’s newspapers’ reports about the budget seem to complain about the tax hikes. Daily Monitor screamed Tax-heavy Budget, the New Vision led with a headline: Budget, and then put kickers highlighting new taxes and allocation per sector.

For government the shillings 13 trillion budget makes it happy since it will be financed 81% by Ugandans. And, for the citizens, it is a call to work harder in face of tough financial times ahead of the implementation of this budget.

By Mubatsi Asinja Habati