Home Commodities Tax relief on essential commodities would be suicidal, says Museveni

Tax relief on essential commodities would be suicidal, says Museveni

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President Museveni on Sunday ruled out any possibilities of slashing taxes as a measure to curb escalating prices of essential commodities in Uganda.

“Removing taxes or subsidizing taxes would be a blunder… removing taxes on especially imported items is suicidal,” he said.

Mr Museveni said Uganda is currently stuck on making a choice between an absolute “collapse of the economy or survival.”

“If we subsidies or even just remove taxes on imported commodities like fuel and the purchasing level remains the same, the reserves will be bleeding. Also worse, people may buy more of the commodity,” Mr Museveni said.

Mr Museveni emphasized that removing taxes on locally produced items such as cement, sugar and coffee would not only deplete the national reserves but also inflict tax revenue loss of more than Shs500billion.  

“The route to tax cuts and subsidies was not a wise one. The wise ways are to frugally use these imported items or excuse yourself from using them. Then to use our own raw materials as we wait for expanded palm oil production which takes longer,” he told the nation in a televised address.

President Museveni accused merchants of tax subsidies of being “cheap politicians with a populist agenda”- just over three days after security forces in Kampala blocked a peaceful protest by opposition figure Dr Kizza Besigye over surging commodity prices.

Dr Besigye claimed Uganda’s beleaguered economy was due to State extravagance amidst lacking output by the government in responding to the crisis.

But for Mr Museveni, “the problem of high commodity prices is easier to solve than Covid-19 was and it’s not new in Uganda.”

“We handled the shortages of 1986 correctly…If handled well with patience and correct response, rising prices will turn out to be an advantage to the country,” Mr Museveni remarked.

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