Continued from the first part on the debate on social media and mobile money tax
Bahati: We can debate these measures but it is important that we debate them after receiving this information. The resources that we use to finance the budget come mainly from three sources. One of them is revenue mobilisation, the second is borrowing. We have had requests to do with borrowing on the Floor of the House. However, even when you borrow, you must use domestically generated revenue to pay the principal and the interest.
Therefore, when we charge something small for the mobile money business and the boda bodas – There are issues I have been raising here about boda bodas. I think we must be consistent because sometimes we say one thing and the next day we say something else. It is important that we are consistent. The most important thing we should ask is: “is this tax going to hurt the poor?” If so, by how much is it going to hurt them?
Remember, there is no tax that is priceless. If there was an option, no Ugandan would opt to pay tax. Unfortunately, there are few things that you cannot avoid in life - death and tax. However, when we are imposing it, it must be reasonable. That is why we are saying one per cent and not two or three per cent. We are imposing something small.
Therefore, I would like to thank Members for the contribution you have made and we look forward to meeting you at the committee stage. Thank you.
Robert Centenary (FDC Party MP, Kasese Municipality, Kasese): Thank you. The procedural point I am raising is based on the debates that have ensued here. One is about the policy on regulating mobile money transactions, which is now becoming a taxable item.
Mr. Speaker, wouldn't it be procedurally right for the honourable minister to first of all bring the guidelines that regulate this mobile money industry? Transaction costs are usually raised from time to time. One time, you pay Shs 20,000 to withdraw Shs 1,000,000; another time, it will be Shs 30,000. We need to regulate this industry and then tax it properly. Wouldn't it be procedurally right that we start thinking about taxing the mobile money industry after streamlining it through a proper law?
Oulanyah: Honourable members, one of the principles of taxation is that there will be no taxation without representation. Taxation does not have to be based on any other law except the law creating the tax. We do not have to premise on any other law except that law that creates that tax. That is what they are trying to do in this Bill.
This law is now creating the tax; what do you need another law for to create the tax? This law is creating the tax to regulate a sector that is already functional. Money is exchanging hands and transactions are taking place and they are proposing that those sets of transactions should attract some kind of taxation. That is what they are proposing here. Therefore, we are proceeding very well.
Honourable members, we need to make progress on these issues. Honourable minister, let us see how to conclude this issue. This Bill does not only talk about mobile money transactions, cooking oil and motorcycles; it has other components. The best way to deal with those aspects that do not have any issues and those that have issues is to move to committee stage and deal with them there because the debate has been sufficient to cover the subject.
Honourable members, this is Parliament and it is an institution that is in charge of policy decisions. No law will become law unless Parliament approves it. No tax will become chargeable unless this Parliament approves it. That means we must exercise some level of responsibility when we decide on which taxes to apply and which taxes not to apply.
Therefore, the fundamental question that we should be asking ourselves is: is it okay that this sector is not taxed at all? - Is it okay, really, honorable members, that you have transactions going into trillions of shillings that are not attracting tax? Is it okay? Let us systemize our debate. If it is not okay, is the proposal reasonable? If it is not reasonable, what is reasonable?
It should not be for Parliament to say that this should not be taxed at all. In all fairness, considering everything and what we are going to do today and tomorrow in terms of passing a budget that needs to be financed. If we take that decision, then we now need to assess whether it is reasonable. If it is not reasonable, then debate that and take a decision on it, instead of saying “no” on oil and on everything. Where then do you get the money from? I think it is a question of how much and not never.
I am going to put the question on the motion for second reading of the Bill and we will then go to committee stage where we will take those decisions. Is that okay?
Aol Betty (FDC Party MP, Woman Representative, Gulu): Mr. Speaker, I would like to get one thing clear and also to propose. We have this transactional fee which is now even a burden on us; what If we decide to reduce on that and let part of it become the tax that we need? I suggest this because people are now overburdened by that transactional fee. Thank you.
Oulanyah: Honourable minister, there are also issues you need to consider. Many of us use mobile money. If you transfer across networks, the costs are extremely exorbitant. It is the same economy, the same people and same Government; why would you pay Shs 10,000 for a transaction from MTN to MTN and for the same amount you pay Shs 50,000 when you are crossing the networks? Does it make sense really? (Applause)
These are things we should harmonise so that cross-network transactions are harmonised properly and do not impose an extra burden on the people. If you are using M-Sente, you should be able to transact across networks without any additional costs. (Applause) If you are using Airtel Money or MTN Mobile Money, it should be the same cost across board. These are the regulatory things that Government should get involved in because leaving it freelance is killing people. The experience is that when you send money from MTN to Airtel, you pay almost the equivalent of the money you have sent. Those are things you should talk about and bring everybody on board and then we move together.
Okupa: Mr. Speaker, I think that is why the minister was dodging the question I asked him. I asked, what is the law regulating this business? It was based on that. The minister should first respond to that question you have put. Now that it is from you, the Speaker, I would like to see how he is going to dodge it. (Laughter) He should be able to respond to that. Those are the concerns.
The other one is that, if you are anywhere in the world, you can be able to send mobile money but the cost of sending it is high. If you are in the USA, for example, and you have money on your phone, you can send it to Uganda but the cost is about three to four times higher. Those are things that the minister needs to clarify first.
It is not just about bringing the taxes. No one is opposed to the issue of taxing, but these are the concerns. That is why we needed a law. Remember even hon. Katuntu went to court over this matter and the courts said, “You are right but you are the people who are supposed to make the law; go back and make the law”. Hon. Katuntu brought this to the Ministry of Finance, Planning and Economic Development. They promised to come here and Bank of Uganda also promised but nothing happened. (Mr Katusabe rose_)
Oulanyah: Honourable member, on what matter do you rise?
Katusabe: In response to concrete –(Laughter)
Oulanyah: You are not on the Floor; you cannot be responding. (Laughter) You either rise on information, procedure or order; you do not just show up, honourable member. (Laughter)
Katusabe: Concrete proposals, Mr. Speaker.
Oulanyah: No. Are you debating?
Katusabe: I have further information on concrete proposals - (Laughter)
Katusabe: Thank you very much, Mr. Speaker. I totally agree with you that we are caught up in a catch-22 situation. We have a budget and we need the money to fund the budget. I rise basically to offer, if it helps, specific and concrete proposals on mobile money.
We can increase excise duty from 10 per cent, as it is today, to about 17 per cent. Secondly, I propose that we introduce a 0.3 per cent charge on cash-outs. The third proposal is that we introduce 0.3 per cent on withdrawal fees, specifically focussing on the agency banking. The reason –(Interjections) Please, let me make my point.
Silas Aogon (Independent MP, Kumi Municipality, Kumi): Mr. Speaker, when anybody is driving and they are not sure of where they are going, they need to go to their brakes. I am rising on a point of procedure. When we are dealing with figures, we must watch the figures critically. We are talking about one per cent tax on mobile money here but he is talking of 0.3 per cent, which is actually three times heavier than what we have been talking about here –(Interjections)- Yes! First take time to listen.
What is the implication of the 0.3 per cent that we are talking about? Maybe you wanted to say 0.03 per cent and not 0.3 per cent. This is because 0.3 per cent is heavier than one per cent.
Oulanyah: Therefore, the procedure –
Aogon: The procedure is whether it is correct for us to allow the Member –
Oulanyah: Are you proceeding properly, honorable member?
Aogon: That is what I am inquiring - whether he is proceeding properly.
Oulanyah: No. I am asking whether you are proceeding properly. (Laughter)
Aogon: Maybe I did not hear him properly, but he was saying 0.3 per cent yet we are saying 0.1 per cent. Which of them is higher than the other? –(Interjections)- Did he say one per cent or 0.1 per cent? Thank you.
Katusabe: Mr. Speaker, my second degree is in statistics. Therefore, I would like to encourage my colleague to recognise that I meant what I said and I made some statistical computation.
The reason I was saying that is because we are targeting Shs 155 billion if we upheld the one per cent. However, if we applied my proposal, we would be able to generate Shs 232 billion - if we applied 17.5 per cent on withdrawal fees, 0.3 per cent on cash-outs and 0.3 per cent on agency banking. In other words, we will have Shs 77 billion in addition to Shs 155 billion.
Mr. Speaker, I am speaking with statistical influence. Thank you.
Muwanga Kivumbi (DP MP, Butambala County, Butambala): Mr. Speaker, for the record, I do not stand here to purely oppose this tax. However, I want three things to be made clear. If I am going to send Shs 1 million, for example to my mother in the village, I would be required to pay a transaction cost of Shs 20,000 for sending. It is me who is paying. It is me who bears the tax. On top of that, you are saying I must also pay an extra one per cent. On receiving the money, the old woman will also pay withdrawal fees.
My bone of contention is that normally, the one who sends - I send money to my voters but they always ask me to ensure that I pay the withdrawal fee. That is a trend and we do it every day. If I am going to pay someone Shs 1 million, he or she will insist that I pay the withdrawal charge. It happens to whoever sends money. This person will pay the transaction fee for Shs 1 million, which is Shs 20,000, and yet you are planning to impose other taxes.
My humble appeal to the minister is that he should go back and reconsider that kind of tragedy, where one person is being taxed. My proposal is that we should remove the percentage on withdrawal. Mr Speaker, you are sending money to the poorest of the poor –(Interruption)
Aol: Thank you, honourable member, for giving way. I would like to give information that if you are sending Shs 100,000 and you want the person receiving the money to withdraw exactly Shs 100,000, you pay Shs 103,000, which attracts more fees than the Shs 100,000. You are giving that person Shs 103,000 yet you are also paying a sending fee, which is more than what you could have paid if you were to send Shs 100,000.
Mr .Speaker, that is a challenge to us. You want to meet the fees for your mother and yet they are going to charge you more on what you intend to pay. Thank you.
Kivumbi: Mr. Speaker, there is also the problem you have raised about transactions across networks.
My other bone of contention is that we already have a budget proposal where expected revenue from this tax is incorporated and there is a minister at hand. Therefore, for us to come here and simply say “remove”, we would have to look at the other side and consider how difficult it would be to raise the money.
Mr. Speaker, I have had an opportunity to critically look at the budget before this Parliament. I think it is a budget that is going to heavily depend on borrowed money. However, care must be taken so that the poorest of the poor are not hit hardest by the taxes we intend to impose.
Therefore, my humble proposal is that the minister, who has everything at hand, goes back and solves the following things: The first is the money that is imposed during transactions. Can we innovate around that? The argument of the minister is that if we do so, companies will automatically transfer that burden by raising the fees. Without regulations, which Members have talked about, companies would be at liberty to do so. This is because we have no regulatory mechanism on how to handle it.
My humble appeal to the minister is that he goes back and solves that problem so that we can get something fairer, reflecting a figure that will not be injurious to the overall budget revenue source.
Anywarach: Mr. Speaker, there was a time you quoted something from the American War of Independence, 1975 - no taxation without law - and it goes to exactly what hon. Okupa was raising.
Mr. Speaker, before we go to the committee stage, the committee chairperson made a submission to the effect that boda bodas are charged Shs 100,000 and if they make an additional increment, it would go to Shs 150,000. We want to set the record straight. Boda bodas pay the following taxes: They pay registration fee of Shs 268,000; on top of that, they pay Shs 500,000 as taxes, which if combined is already Shs 768,000. They also pay Shs 127,000 for the number plates and they pay for other things like insurance, boda boda stage, memberships, etcetera. All this comes to over Shs 900,000. We should make the records clear.
For those of us who come from the border – Arua, Adjumani, Koboko, Yumbe and maybe even Ntoroko – sometimes our people buy motorcycles from Congo. When they come back, they start riding immediately. Some of these people sold their land to buy the motorcycles. As soon as they start riding to raise money to begin paying taxes, they are told taxes are not paid in bits. As a result, their motorcycles are impounded and sometimes they are arrested. When the tax agents are selling the impounded motorcycles, they sell them through an auction and sometimes they are sold at Shs 300,000 or Shs 400,000. Therefore, as we go to the committee stage –(Member timed out.)
Oulanyah: Please, wind up.
Anywarach: As we go to the committee stage, the committee chairperson and the minister should look at the burden that these young men have. Thank you.
Bahati: Mr. Speaker, I think you have guided us well, that “no tax” is not the best option but we could have a win-win situation as we move forward. That is very important. If that conversation can start at committee stage, maybe a few of us will make some proposals. However, I would like to request that we should maintain some transactional fee on mobile money and look at other areas and then balance the issue of the resources we had already provided for. Therefore, I think we are now at a very right moment to move to the committee stage. I thank you.
Oulanyah: Honourable members, can I now put the question to the motion for the Bills' second reading? Honourable members, I now put the question to the motion that the Excise Duty (Amendment) Bill, 2018 be read the second time. I put the question.
(Question put and agreed to.)
BILLS COMMITTEE STAGE
THE EXCISE DUTY (AMENDMENT) BILL, 2018
Oulanyah: I put the question that clause 1 stand part of the Bill.
(Question put and agreed to.)
Clause 1, agreed to.
Musasizi: Mr. Chairman, we propose to amend clause 2 as follows:
i) By deleting the headnote and substituting it with the following: “2. Amendment of section 2 of the Excise Duty Act, 2014”
ii) In the definition of “over the top services”, delete the words, “but does not include educational or research sites prescribed by the minister by notice in the Gazette.”
The justification is: to correct the drafting error and also, it is difficult to differentiate what will be used for education and research.
Oulanyah: Can you read the new provision? How will the amended provision read?
Musasizi: Mr. Chairperson, the new provision will read as follows:
“Amendment of section 2 of the Excise Duty Act, 2014…
‘Over the top services' means the transmission or receipt of voice or messages over the internet protocol network and includes access to virtual private networks.”
We are deleting “but does not include…” We would like to stop at “private networks”.
Oulanyah: Honourable members that is the proposal from the committee.
Anywarach: Mr. Chairperson, I think this “over the top services” is where you are going to tax voice messages over the internet protocol and so on and you can only access internet services through service providers. In most cases, these service providers are actually telecom companies like MTN, Africell, to mention a few. By the time you are accessing these services, you would have already paid for airtime.
If we want to stifle development, growth and economic development in this country, let us actually put taxes on communication avenues like Information Technology (IT). I think we are going to completely miss the point.
I would think the right suggestion would be that this amendment is deleted in its entirety - (Interjections)- Mr. Chairperson, you need to protect me from my brother-in-law, hon. Odonga Otto.
You know, hon. Otto is so exposed that he knows that when you go to developed countries, the cost of communications is so low that it is easy for you. Communication is where development starts. If we really go on and tax it, we will have a situation where I load my airtime and as I am taking a call on WhatsApp or a voice call on Viber, the moment airtime gets done, I cannot access that service and yet I already paid taxes by the time I bought the airtime.
Mr. Chairperson and colleagues, I think we need to reconsider, if you want a trade-off. We need to reconsider and delay –(Interruption)
Oguzu Lee Denis (FDC Party MP, Maracha County): Mr. Chairperson, I wanted to inform the Member that Uganda signed to a principle known as net neutrality. There is an understanding that Over the Top Services (OTTs) must not be treated differently by any telecom communications company. Uganda is a signatory to that –(Interjections)– We can, at an opportune time. However, that should be investigated. Uganda has signed to that and it requires that no OTT must be treated differently.
Anywarach: I thank you for the information. Finally, honourable minister, I have good news for you. Yesterday, I proposed on the Floor of this Parliament that we should exempt broadcasting equipment and you said, “No; we need to think about it and maybe consider it next financial year”.
Mr. Chairperson, this is also something we need to think about because he is bringing a new component in the taxation regime. However, it is also going to have an effect on economic development. Many Ugandans do businesses online using WhatsApp and other platforms. Therefore, my understanding is that if we can – Uganda is not ending today or even next year - we can still think about it because tax laws are amendable every year. I beg to submit.
Aogon: Mine is to support what hon. Anywarach has said. Any decisions that we take as a country are based on information. It is not good for us to stifle information flow. Secondly, it is also true that when we buy bundles and airtime, we already pay tax; so in a way, we need to do a study. The minister should crosscheck and find out. Most likely, you will discover that we are going to impose double taxation, which is not acceptable.
Therefore, I will go by the proposal to delete that clause for the good of the common man. As Uganda, we are now looking at science and technology; how do we promote it if we do not have information flow? That is my proposal. Let us delete that clause. Thank you.
Bahati: Thank you very much, Mr. Chairperson. First, to allay the fears of hon. Anywarach, it is not true that we are imposing tax on data, which is a main source of information. We are not taxing data. We are not taxing the internet. We are taxing OTTs.
If you are using WhatsApp or Viber, the Shs 200 which we are proposing here will actually translate to Shs 70,000 per year. That is what we are talking about. It is Shs 70,000 the entire year –(Interjections)– You are making a contribution of Shs 70,000 for the whole year; can you imagine! It is as simple as that.
We are not taxing data and internet. We are not taxing educational materials; you are aware of that. Therefore, Mr Chairperson, in simple terms, this is what we are trying to do. You are providing Shs 200 per day for access and it is translated into Shs 70,000 per year. It is very little but it is a contribution to the development of your country.
Aogon: Mr. Chairperson, without the bundles that we buy, we cannot access WhatsApp. I know that very well. You have got to have mobile money and then you can use it to buy Megabytes (MBs) before you can access WhatsApp. How do you tax what has already been taxed? That is the issue. If you doubt what we are saying, let us then do some practicals here and then you will see.
Annet Nyakecho (Independent MP, Tororo North, Tororo ): Thank you, Mr. Chairperson. I would like to seek clarification from the minister. We know that OTT services are mostly consumed by the young people. They are the ones you find using WhatsApp and Facebook. These are graduates who do not have a lot of money. Before you access these services, you have to load airtime, which is again translated into internet bundles of whatever amount you want. Already, I assume you will have paid some tax. So, isn't this double taxation?
Bahati: Mr. Chairperson, the taxes we are talking about are different. The taxes the honourable member was referring to are different. First of all, like I said, it is important to note that we are not taxing data. If you are accessing the internet, we are not taxing data but we are –(Interjections)– Yes, we are not taxing the internet access.
If you look at the excise duty on page 6, it is per user per day of access. So, if you do not use WhatsApp in a day, you do not contribute. However, if you use it, you only contribute Shs 200. That is what we are saying. Double taxation would mean you are paying double taxes for the same service. However, this is different.
Okupa: Can I ask for clarification, honorable minister. You are saying the charge is every time you access. When I open my phone to read a message sent by hon. Bahati to me, do you tax me? When I open my WhatsApp to send a message to the chairperson of the committee, will you tax me again? Is that what you are saying?
Bahati: No, when you access your WhatsApp at 6 a.m. in the morning, you then qualify to contribute that Shs 200. You can access WhatsApp a million times that day as long as you would like. (Interruption)
Okupa: Honourable minister, you can only be off WhatsApp once you do not have data. However, once you have data, you will be on full time. Sometimes, you will find the messages are already delivered. So, once you have data on your phone, you are on WhatsApp full time.
Bahati: Yes, that is why we are not taxing data. We are only charging.
Okupa: But, you buy data –(Interruption)
Bahati: How would you access WhatsApp if you do not have data? Data is not being taxed. We are not taxing internet but we are taxing –(Interruption)
Kakooza: Thank you, honourable minister. In clause 2, we are amending Act 11 - the Excise Duty Act, 2014. Here, we are trying to define “over the top services”. This is what this clause intends to do. It says, “‘Over the top services' means the transmission or receipt of voice or messages over the internet protocol network and includes access to virtual private networks but does not include educational or research sites prescribed by the minister by notice in the Gazette”.
That means they would like to exempt people who are doing research according to this definition, and gazette –(Interruption)– Yes, it does not include educational and research sites, and this has been a complaint, that when you go to research –(Interjections)– Of course, there is already a schedule in the Bill, where the minister already gazettes. That is what clause 2 is trying to do. If you read the Bill, clause 2 is trying to define what is exempted and what is not exempted.
Kasule Ssebunya (NRM Party MP, Nansana Municipality, Wakiso): Mr. Chairperson, I hope the honourable members agree to listen to me.
We have a dilemma as technology is changing every day. People are no longer using the normal calls that Government has been taxing. Excise duty of 12 per cent has been paid per normal call. Now because technology is turning into voice messaging, WhatsApp calls and others, we are losing revenue. Even institutions are losing money on normal calls because people are changing as technology changes.
Mr. Chairperson, we have now locked in figures in the budget; education and defence need trillions of shillings and we are at the tail end of the budgeting process. Therefore, if we refuse this tax Government is proposing, that means we will not fulfill the agenda of Government as far as meeting revenue to support service delivery is concerned.
Honourable members, technology is changing. Artificial intelligence is here. We already have bitcoin; so, we need to come back here next year to tax such kind of banking that is emerging. Honourable members, we must move with the times because technology is not waiting for us. I thank you, Mr Chairperson.
Col (Rtd) Fred Mwesigye (NRM Party MP, Nyabushozi County, Kiruhura): Thank you, Mr. Chairperson. Honourable colleagues, whereas I appreciate that we are paid to talk, we should be mindful about how we raise revenue to support the ever-increasing demands for infrastructure, electricity and our salaries, which we are all dying for in our constituencies and personally here. How do you want us to raise the revenue to meet all these demands if you are failing to appreciate this small tax? It is not even a big tax. Mr Chairperson –(Interruption)
Odonga: Thank you, hon. Mwesigye. Research, which has been done by a university student, shows that people use WhatsApp only during weekdays and in many cases, during working hours. You walk to every office, one after another, and the staff are even stealing office time to enjoy private chats on WhatsApp.
I did economics at the university, mind you. (Laughter) WhatsApp, Viber, Facebook are ostentatious commodities. They are almost like perfume. The ordinary man in the village can do without it. (Applause) We are looking for a certain category of people who do not mind about the Shs 200. Personally, I do not mind because I need WhatsApp. It is a tax, which is targeting the elites - those who are ostentatious. It does not affect the ordinary man in Pader. That is the information I wanted to give. (Applause)
Mwesigye: Thank you, my dear colleague, for that useful information. As you have heard, dear colleagues, let us not waste a lot of time on this matter; let us all support this tax so that we meet the demand in your constituencies and our personal demands as Members of Parliament. We should –(Interruption)
Lugoloobi: Mr. Chairman, right now we are dealing with a national budget and I have noted the fiscal deficit. The target in the Charter for Fiscal Responsibility, which we have to comply with, is 3 per cent. As we speak, instead of this fiscal deficit reducing from 5 per cent downwards, it is now increasing to 8 per cent. The deficit is widening, which is a very big threat to our economy.
Friends, if you really love your economy and you want your economy to survive, you have to generate more tax revenue. We cannot sustain this economy by borrowing, and remember that most of the resources today are domestically borrowed, which is very expensive for this country. Let us save this country by asking our people to pay taxes. That is the only way. We all agree that the way we do things has migrated from the way we used to do them; it is now more than at the convenience –
Mwesigye: This was information. Mr. Chairperson, let us be realistic and save this country and our constituencies because the deficit is increasing as a result of our demands. We want electricity, schools, and technical institutions in every sub-county and we want to increase salaries. Even you want a salary increment. How do you think you will –(Interruption)
Lt Col (Rtd) Bright Rwamirama (NRM Party MP, Isingiro North): Thank you, honourable colleague, for giving way. Mr Chairperson, I would like to inform you that in Africa, in terms of the cost of mobile telephone calls and data, Uganda is still the lowest. I was in Burundi where if you make a call, it costs three times as much as here. I was in Mozambique where a call costs four times as much as in Uganda –(Interjection)– I am not known for telling lies; it can be verified.
Mr. Chairperson, this is an area where we can generate money to cover some of these deficits. Therefore, people should be encouraged to approve this tax because it is necessary.
Oulanyah: Honourable members, let us stand over this clause and come back to it. (Applause)
Oulanyah: I put the question that clause 3 stand part of the Bill.
(Question put and agreed to.)
Clause 3, agreed to.
Clause 4, agreed to.
Clause 5, agreed to.
Musasizi: Mr Chairperson, we propose to amend clause 6 as follows:
1. In paragraph (a) by substituting item (d) with the following: “(d) opaque beer - 30 per cent or Shs 650 per litre, whichever is higher.”
The justification is: to impose the same rate of tax on products, which are similar, being made from the same products.
2. In paragraph (b) by substituting for item (c) the following: “Ready to drink spirits - 80 per cent or Shs 1500 per litre, whichever is higher.”
The justification is that when computed, the equivalent of 80 per cent should be Shs 1500 not Shs 1300.
3. By inserting a new paragraph (d) immediately after paragraph (c) to substitute item 5(a) with the following: “Non-alcoholic beverages not including fruits or vegetable juices - 12 per cent or Shs 200 per litre, whichever is higher.”
The justification: to enhance Uganda's competiveness in the East African region where these countries are charging 10 per cent.
4. By inserting a new paragraph (h) immediately after paragraph (g) to read as follows: “16. Sugar confectionaries - nil.”
The justification is: to enhance Uganda's competitiveness in the East African region where these countries have exempted confectionaries.
5. Paragraph (h) is amended as follows:
(a) In item 20, substitute the words “two hundred” with the words “one hundred”.
(b) By substituting for item 21(a) the following: “a minimum planned investment capital of US$ 15 million in the case of a foreigner or US$ 10 million in the case of a citizen of a Partner State of the East African Community.”
(c) By inserting a new paragraph (b) to read as follows: “a bank guarantee/bank draft of the equivalent of the sums of money under item 21(a).”
(d) In item 22, substitute the word “fifteen” with the word “eight”.
(e) In item 23, substitute the word “ten” with the word “five.”
The justification is to reduce the capital threshold to attract investors to the country.
Oulanyah: Thank you, chairperson. I would like you to go back to your proposed amendment No. 4, where you are using brackets. Did you maintain those brackets? You took them out? Okay, thank you.
Honourable members, that is the proposal from the chairperson of the committee. Can I put the question to those amendments as proposed? I put the question to the amendments.
(Question put and agreed to.)
Bahati: Mr Chairperson, I wanted to convince the chairperson to drop the issue of bank guarantee/bank draft in (c) because this is in relation to the incentives. If somebody is going to invest Shs 200 million and you say he should put a bank guarantee of Shs 200 million, most of this is a cash guarantee and it complicates the situation.
The law itself is enough to give us a guarantee, instead of forcing somebody to invest and again look for money to look for a guarantee or a bank draft. You know that one cannot get a bank draft without cash.
Musasizi: Mr. Chairperson, I agree with the minister, therefore I concede.
Oulanyah: Would you like to withdraw your amendment? Proceed.
Musasizi: Mr. Chairperson, I would like to withdraw our earlier amendment under No. 4(c) - “A bank guarantee or bank draft of the equivalent of the sums of money under item 21(a).”
Oulanyah: Honourable members, the motion we had adopted included this amendment. Now the motion is to withdraw that amendment from the proposals. I put the question to that.
(Question put and agreed to.)
Bahati: The last one that I have is on the amendment to clause 6(a) where the chairperson has proposed Shs 650 per litre. Those of you who participate in this will know that as we speak, a bottle of Kibuku beer is at Shs 2,000 per litre and its cost is Shs 700. We are saying that the tax should be 30 per cent of this cost, which is Shs 211. If we put the figure of Shs 650 when the actual cost of producing it is Shs 700, when you say “whichever is higher”, you will go with the higher amount. As a result, you will find the cost of Kibuku beer going to Shs 1,600 or Shs 1,700.
One of the reasons why this product has been treated this way is because they use our local materials like maize to make it, unlike other spirits and drinks. Therefore, it is important that we balance it so that we can make a decision –(Interruption)
Franca Akello (FDC Party MP, Women Representative, Agago): Mr. Chairperson, when Kibuku beer and some other products were brought before the committee, the samples did not include one-litre bottles; they had half-litre bottles and each was going for Shs 2,000. Here, we are legislating for a litre. The cost of a bottle of Kibuku beer, which you are saying is Shs 2,000 per litre, is not correct. It is Shs 2,000 per half litre. Your calculations should therefore be in regard to that measurement.
Bahati: I would like to suggest that instead of taking this figure, which they have proposed, let us remain with 30 per cent. Let us avoid the Shs 650 because when you calculate it - We really do not want to drive companies out of business; we would rather leave it at 30 per cent.
Oulanyah: Honourable minister, you cannot do that; there has to be consistency in the law. Other provisions are making those double alternatives and you want this particular one, because of Kibuku, not to apply. We have to be consistent in our legislation.
The justification here is to impose the same rate of tax on products, which are similar, being made from the same product. In other words, to balance make them even.
Kakooza: We decided to do so because in canons of taxation, tax must be easy to collect and that is the principle. When you make it of the same footing, URA charges this type of beer on ad valorem.
When they say 30 per cent or Shs 650 per litre, it is because the gadget they have measures in litres, so you cannot say that you will remain with only 30 per cent. When they are calculating, they do so depending on the litres produced in the industry and we are putting them on the same footing with others so that it is not discriminatory.
Musasiizi: Mr. Chairperson, when this matter came up, the concerned stakeholders appeared before the committee with different brands of beer to prove to the honourable members of the committee that these products are produced using the same raw materials and the branding is the same. The only difference is the name. They are not asking for anything more than equal treatment as far as taxation is concerned. Therefore, I do not see any harm that this proposal is likely to create.
Oulanyah: No, I have already put the question and we have adopted it. I now put the question that clause 6, as amended, stand part of the Bill.
(Question put and agreed to.)
Clause 6, as amended, agreed to.
Oulanyah: We stood over clause 2.
Anywarach: Mr. Chairperson, the gist of this law is in clause 6, where we find the Shs 200 per litre increment on cooking oil in 18 and in 19, the Shs 200,000 on motorcycles. I stood to make my justification as we debated. I seek your guidance on when we can raise this because what we stood over has a bearing on Schedule 2. Thank you.
Oulanyah: Honorable member, when they called for clause 6, the committee chairperson proposed amendments. I put the question and it was adopted. The honorable minister rose to make some alteration on what we had we had adopted and the House agreed to one change and rejected the other. We called for the final vote on clause 6, as amended, and there was nothing so we adopted it.
Anywarach: Mr. Chairperson, I personally stood up.
Oulanyah: We can recommit it. Are there still issues on clause 2?
Musasizi: Mr. Chairperson, I can repeat it. I had already proposed –
Oulanyah: They had already proposed an amendment to delete, “…but does not include educational or research sites prescribed by the minister by notice in the Gazette.” That is what the committee proposes to delete. I put the question to the deletion of those words in clause 2.
(Question put and agreed to.)
Anywarach: Mr. Chairperson, my proposal was deletion of the whole of clause 2 and my justification is that the moment I load internet data on my telephone, I can either use it for direct calls or direct messages by Short Message Service (SMS). I may also choose to use WhatsApp messages or calls or Messenger calls. However, the length of time that I can access these services is determined by the amount of data that I have and the amount of data is determined by my airtime. In a nutshell, we are doing double taxation.
My question would be, would it have been different if I decided to use my data to make direct voice calls or used airtime or sent a message using my airtime? It is actually the same. We are even going ahead to violate the United Nations (UN) resolution that internet access is a right.
Therefore, as long as the OTT services are accessed through internet connection, I would think - Minister, we have considered so many of your proposals, including even accepting to come to committee stage. Let us drop this idea, delete clause 2 and then we can compute because it has a bearing on clause 6, which I was proposing. That is where the charge is on the over the top services. Thank you, Mr. Chairperson.
Oulanyah: Honorable members, let us move together. If the UN says internet services are a right, does it mean they should be free? Let us deal with the issue in a more pragmatic way.
Can I put the question for deletion? The proposal from hon. Anywarach is that clause 2, which we have amended, be deleted. I put the question that clause 2 be deleted.
(Question put and negatived.)
The Title, agreed to.
MOTION FOR THE HOUSE TO RESUME
Bahati: Mr. Chairperson, I beg to move that the House do resume and the Committee of the whole House reports thereto.
Oulanyah: Honourable members, the motion is for resumption of the House to enable the Committee of the whole House report. I put the question to that motion.
(Question put and agreed to.)
(The House resumed, the Deputy Speaker presiding.)
REPORT FROM THE COMMITTEE OF THE WHOLE HOUSE
Bahati: I beg to report that the Committee of the whole House has considered the Bill entitled, “The Excise Duty (Amendment) Bill, 2018” and passed it with amendments.
MOTION FOR ADOPTION OF THE REPORT FROM THE COMMITTEE OF THE WHOLE HOUSE
Bahati: Mr. Speaker, I beg to move that the report from the Committee of the whole House be adopted.
Oulanyah: Honourable members, the motion is for adoption of the report of the Committee of the whole House. I put the question to that motion.
(Question put and agreed to.)
Anywarach : Mr. Speaker, I move a motion for re-committal of clause 6 on the amendment of Schedule 2 of the principal Act. My concern is –
Oulanyah: Is the motion seconded?
Oulanyah: It has been seconded by Members of Parliament for Kilak South County, Kalungu County West and Lira Municipality. Yes, hon. Anywarach, would you like to justify your motion for re-committal?
Anywarach: Mr. Speaker, in the course of debating the principle of the Bill, we realised that three items were very contentious. We followed your guidance that we cannot reject it totally but we may have to reconsider the amounts, especially for cooking oil, which has an increment of Shs 200 per litre - that is 18 - and under No. 19, motorcycle registration at first registration, which is Shs 200,000.
I said that right now, motorcycle registration, from paying for the number plate to registration fees and taxes, will go to over Shs 900,000. Therefore, we need to reconsider the figure and that is why I wish the House to accept the re-committal. The third amount is the one per cent on mobile money transactions. I beg to submit.
Oulanyah: Honourable members, the motion has been moved for re-committal of specifically clause 6. I put the question that the Bill be re-committed for purposes of reconsidering clause 6.
(Question put and negatived.)
BILLS THIRD READING
THE EXCISE DUTY (AMENDMENT) BILL, 2018
Bahati: Mr. Speaker, I beg to move that the Bill entitled, “The Excise Duty (Amendment) Bill, 2018” be read the third time and do pass.
Oulanyah: Honourable members, the motion is that the Excise Duty (Amendment) Bill, 2018 be read the third time and do pass.
(Question put and agreed to.)
A BILL FOR AN ACT ENTITLED, “THE EXCISE DUTY (AMENDMENT) ACT, 2018
Oulanyah: Thank you. Congratulations, honorable chairperson, honorable minister; and thank you, honorable members, for a lovely debate.