Civil society activists urge Parliament to deny five year tax exemption to Bujagali hydro power dam.

Civil society activists have asked Parliament to reject a request by Ministry of Finance to gift Bujagali Hydro Power dam another tax exemption of five years, saying Uganda’s struggling economy can’t take on any more tax exemptions.

The plea was made by Henry Baziira, a member of Tax Justice Alliance while addressing journalists in Kampala to give their views on the nine proposed tax bills that were tabled by Government.

Because of the exemption that was allocated to Bujagali, Government’s tax expenditure of money we have foregone is Shs108Bn as of 2019/2020 and it was Shs100Bn 2020/2021. These exemptions that are given are a huge cost to government and in order for them to renew the exemptions to Bujagali, they need to first do a study to assess the benefit of the exemption whether it is still justifiable for us to continue exempting Bujagali,” Baziira said.

He also rejected the proposal by the Ministry of Finance to have the income of a manufacturer, whose investment capital is, for over a period of at least ten years from the date of commencement of business, at least US$35 million for a foreign investor or US$5 million for an investor who is a citizen, who has capacity to source at least fifty percent of the locally produced raw materials, subject to availability; and capacity to employ a minimum of one hundred citizens, saying there is no justification for this exemption.

While introducing the Income Tax Amendment Bill 2022, Henry Musasizi the Minister of State for General Duties proposed to amend section 21 of the Income Tax Act to extend the income tax exemption for Bujagali Hydro Power Project from 1st July 2022 to 30th June 2027.

If this proposal is approved by Parliament, it would mean Bujagali Hydro Project has been exempted for 20years with the first exemption coming for 10years, and the company received another exemption in 2017 for 5years, which ends in June 2022.

Meanwhile, Speaker Anita Among has called the Finance Committee to finalise their reports on the tax bills to allow Parliament supply money in the budget so as to beat the 31st May deadline within which Parliament is supposed to pass the national budget.