Parliament will commence discussions this week on the government’s proposals to implement a 5% capital gains tax on non-business assets, including land and rental properties within cities and municipalities. The move comes as part of the government’s efforts to boost domestic revenue and reduce borrowing.
Speaker of Parliament, Annet Anita Among, announced the forthcoming deliberations, revealing that the Tax Bills would be a key focus during the parliamentary sessions. The proposed legislation encompasses various measures, such as imposing a tax of Shs 500 on each 50kg bag of construction materials like lime, and a 0.5% levy on cash withdrawals from agent banking. Additionally, fuel products could be subject to taxation.
“We need to take our time on the tax bills. Even if we pass one bill in a day, we should be able to handle them systematically,” remarked Speaker Among, emphasizing the need for thorough examination and deliberation.
The government aims to implement a comprehensive domestic revenue mobilization strategy spanning from 2019/2020 to 2023/2024, which seeks to increase tax collection to between 16% and 18% of the country’s Gross Domestic Product (GDP) over the five-year period.
To achieve this target, the government plans to broaden the tax base and propose new taxes on essential goods, such as building materials and fuel, for the upcoming fiscal year. By doing so, they hope to reduce borrowing and address anticipated revenue shortfalls.
Nevertheless, experts within the tax authority express skepticism about the feasibility of achieving the revenue collection targets. They acknowledge that meeting these objectives may prove challenging given the prevailing circumstances.
If approved, the proposed taxes are projected to generate Shs 1.9 trillion in additional revenue, which will contribute to the government’s proposed budget of Shs 58.3 trillion for the fiscal year 2024/2025.
In a related development, local traders eagerly wait for their second meeting with President Museveni, scheduled for May 5, 2024. The meeting will primarily address concerns and complaints regarding various tax-related issues, particularly the implementation of the Electronic Fiscal Receipting and Invoicing Solution (EFRIS) system.
