MPs, Museveni in Income Tax bill standoff

The refusal by President Museveni to sign the Income Tax Amendment Bill 2016, which cushions MPs from some taxation, has been cheered by civil society activists and sharply criticized by legislators.

Some MPs said they will ignore the president’s request to drop the controversial clause 21, which shields them from further taxation while others believe the president can be persuaded to assent to the law in its current form.

On April 14, 2016, MPs hurriedly passed the Income Tax Amendment Bill 2016, which in effect exempted them from paying taxes on their allowances. The passing of the law came barely two months after Justice Henry Adonyo of the Commercial court ordered that the MPs’ mileage and constituency allowances, committee sitting and town running allowances, basic pay and car purchase allowances, be taxed.

The February 2016 Commercial court ruling was a response to a 2011 petition lodged by Francis Byamugisha, a concerned citizen, who argued that government, was losing billions of shillings in uncollected revenue if MPs allowances and income are not taxed.

The Clerk to Parliament Jane Kibirige later during a presentation of the Parliamentary budget for the FY 2016-17 told the Legal and Parliamentary Affairs committee last month that the Parliamentary Commission would appeal the ruling that would in effect have MPs pay at least Shs 9m in monthly Pay as You Earn (PAYE).

On May 10, during a meeting of committee chairpersons and parliamentary commissioners, Speaker Rebecca Kadaga (chairperson) read the president’s letter declining to assent to the bill. The president said he was cowed by the public outcry in the aftermath of the passing of the bill.

“If teachers can pay tax, why not members of Parliament,” Kadaga said, reading from the president’s letter.

Attending MPs said they were angered by the president’s letter and some blasted the parliamentary commissioners, (Rosemary Sseninde) for not doing enough to engage the president on certain issues concerning parliament.

REACTIONS

Rubanda East MP Henry Musasizi Ariganyira, who is a member of the finance committee which scrutinized the bill, told The Observer on Friday that NRM MPs plan to dialogue with the president to persuade him to sign the bill.

“We are going to talk to him, if he says that he has another way of handling our issue, we will give up, but if there is no other option, we are going to send it back to him the way it is, we cannot accept to be taxed twice,” Musasizi said in a telephone interview.

Amos Lugoloobi, the Ntenjeru North MP and chairperson of the budget committee, said parliament will not change anything in the bill because the MPs’ salary has already been taxed.

“The only solution is to try to educate the public, because they think that we were not paying tax, which is not true. We cannot accept to be taxed twice,” he said.

Outgoing Government Chief Whip Ruth Nankabirwa told journalists at parliament on Tuesday, May 10, that the parliamentary commission should get time and engage the president on the matter. She said public pressure forced the president to decline signing the bill because religious leaders and civil society organizations wrote to him several times.

“No one is willing to accept double taxation among MPs, and the president’s hands are also tied; so, the commission should talk to the president and explain to him the worries of the members; if possible, even the public should be engaged because they were misinformed,” Nankabirwa said.

The outgoing minister of state for Planning, David Bahati, said pressure from the public was too much for the president.

“He had no option but to reject the bill; if we can engage him, the better, because we need to move together with the executive, he listened to the public outcry,” Bahati said.

Busongora North MP William Nzoghu said he won’t accept to be taxed twice.

“We are not going to accept that, we are going to pass it [law] the way it is because the law allows us, if he [president] sends it back again, it will automatically become a law,” he said.

The speaker will table the law before parliament with the president’s request to drop the controversial clause that cushions them from taxation. If it is passed again in its current form and the president  declines to assent to it, then Parliament can pass it into law with support of a two thirds majority.

Julius Mukunda, the coordinator of the Civil Society Budget Advocacy Group (CSBAG), condemned the bill  recently, saying that by exempting MPs from taxes, at least Shs 41.8bn would be lost annually in uncollected revenue.