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End tax waivers for agriculture & let sector contribute to tax pool

As the Ugandan government considers new tax measures for the 2024/25 financial year, the issue of tax fairness and equity becomes increasingly pertinent.

Traditional sectors, including fuel, building materials, and land sales, are facing additional taxation, while the agricultural sector, a significant contributor to the economy, continues to benefit from numerous tax exemptions.

Advocacy for a balanced and fair tax proposal is necessary, one that encompasses the agricultural industry, thereby broadening the tax base and ensuring equitable taxation across various sectors.

The agricultural sector is pivotal to any economy, especially in terms of exports and employment opportunities. In Uganda, agriculture accounts for 50% of the exports and employs a substantial segment of the workforce. However, it is concerning that this sector enjoys extensive tax exemptions, contributing less to national revenue.

This disparity creates an imbalance in the tax system and unfairly burdens other sectors already subject to high taxation levels. The situation calls for a more equitable approach to taxation, ensuring that all sectors, including agriculture, contribute their fair share to the national coffers.

Recognizing the long-standing tax exemptions granted to the agricultural industry is crucial. These exemptions were initially established to encourage growth in a sector fundamental to food security and economic stability. However, given the significant evolution and expansion of the industry, it’s time to reassess these exemptions and work towards a tax framework that is both fair and in line with the country’s broader objectives.

For a fair taxation system, broadening the tax base is essential, moving beyond the usual easy targets. Integrating the agricultural industry into tax reforms would not only generate additional revenue but also enhance fairness and equity among different sectors.

Taxing aspects like inputs, machinery, tractors and other elements related to agricultural operations would lead to a more inclusive and comprehensive tax structure. Another important aspect of establishing fairness is implementing taxes on agricultural exports. It’s unreasonable for substantial agricultural produce sales to be conducted without contributing any taxes.

By applying a fair tax rate to agricultural exports, the government can foster a progressive tax system, ensuring that those who benefit most from the sector’s success pay their proportionate share towards national development.

In advocating for the inclusion of the agricultural sector in taxation, it’s important to consider the impact on farmers, ensuring their livelihoods are not excessively burdened. The government should contemplate introducing tax incentives and deductions that incentivize sustainable farming practices, investments in modern technologies, and adoption of eco-friendly methods.

Such measures would align the tax reforms with goals of economic growth and environmental sustainability. The urgency of a balanced and equitable tax proposal is clear, and incorporating the agricultural sector into tax reforms is a vital step in this direction.

By removing unjustified exemptions and applying reasonable taxation to agricultural activities, inputs, and exports, the government can widen the tax base and promote fairness.

This approach ensures that all sectors, including agriculture, contribute equitably to national development. Now is the time to develop a taxation system that is equitable, well-balanced, and responsive to the changing economic environment.

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