President Yoweri Museveni has returned the Excise Duty (Amendment) Bill, 2022 to Parliament for reconsideration.
The President wrote to the Speaker of Parliament, Anita Among raising concern about the proposal of imposing 40 per cent or Shs4,000 excise duty on each kilogramme on sacks and bags of polymers and other plastics which was rejected.
He also contested the re-introduction of 20 per cent excise duty on sugar confectioneries.
The Deputy Speaker, Thomas Tayebwa read the President’s letter to MPs on Thursday.
“On 18 May, 2022, this House passed the Excise Duty (Amendment) Bill, 2022. The Bill was dully transmitted for presidential assent pursuant to Article 91 of the Constitution. His Excellency in a letter dated 05 July 2022 has returned the Bill for reconsideration of the House,” said Tayebwa.
In the letter, President Museveni said that the Excise Duty (Amendment) Bill, 2022 submitted by the government proposed to impose excise duty at a rate of 40 per cent or Shs4,000per kilogramme whichever is higher on sacks and bags of polymers of ethylene and other plastics.
The only exception in the government proposal were packaging bags for food, juices, tea and coffee and bags for direct use in the manufacture of sanitary pads.
“Parliament rejected the foregoing provision and it is thus not included in the Bill. The decision by Parliament to reject the proposal undermines the objectives government intended to achieve through the excise duty amendment,” read the President’s letter in part.
He stated that one of government’s objectives was to streamline the provisions for taxation of plastic products as provided for in the Excise Duty (Amendment) Act, 2021 with the view to ensuring that the targeting of excise duty is refocused away from sensitive sectors that utilize elements of plastics.
“Parliament rejected the foregoing provision and it is thus not included in the Bill. The decision by Parliament to reject the proposal undermines the objectives government intended to achieve through the excise duty amendment,”
Museveni also noted that this was to also address tax administration challenges associated with its implementation and incentivize owners of plastic recycling plants to enhance their efforts towards cleaning up of the environment.
The President also questioned the re-introduction of a new clause in the Bill that provides for excise duty at 20 per cent on sugar confectionaries.
“Excise Duty on sugar confectionaries was first introduced in financial year 2014/2015 at 10 per cent and was later increased to 20 per cent in 2018/2019. However, government removed it in financial year 2019/2020 following complaints from manufacturers that their products were being outcompeted by cheaper smuggled imports,” Museveni noted.
He said that Parliament’s decision to reintroduce the tax has implications since it goes against government’s decision not to increase taxes in the current financial year 2022/2023 which was intended to support speedy economic recovery especially given the general increase in prices of goods and services.
The President requested Parliament to delete the clause introducing the tax on sugar confectionaries and also approve a government proposal of imposing 40 per cent or Shs4,000 excise duty on each kilogramme on sacks and bags of polymers and other plastics.
However, the Leader of Opposition, Hon. Mathias Mpuuga, said that the Bill was supposed to serve the intentions of the current financial year budget that started on 01 July 2022. He said that it is more than a month since Parliament passed the Bill and appealed to the Ministers concerned with tax bills to always ensure that such delays of Bills do not happen since it disorganizes sector budgets.