A proposal by some MPs to impose a Value Added Tax on bread and bread inputs has been rejected on grounds that most Ugandans in rural communities don’t eat bread.
The proposal was fronted by Muhammad Nsereko (Kampala Central) during the consideration of the Value Added Tax Amendment Bill 2022 where he proposed to have VAT imposed on bread and bread inputs in a bid to bring down the skyrocketing prices of bread.
“In the report, I propose the removal of VAT on bread and bread input,” said Nsereko.
Silas Aogon (Kumi Municipality), also backed the proposal remarking, “At this time when we are thinking about the increase in commodity prices we must be able to look at the things that go into our stomachs first. And therefore, I stand with the proposal from Kampala Central so that people can be able to afford something.”
However Dickson Kateshumbwa (Sheema Municipality) warned against the move arguing that if the proposal is adopted it would be counterproductive and instead lead to increment of price of bread because even though all the bread consumed in Uganda is manufactured locally, most of the products used in the manufacture have VAT.
“It is counter and won’t yield the benefits you are looking for. All the bread we consume is made here and all inputs that go into making bread have VAT, so someone who is making bread is told not to claim VAT then you are making the final product more expensive. I want to propose that the Ministry should look for other ways and we don’t tamper with this proposal,” said Kateshumbwa.
Alex Ruhunda warned against the decision to try address the crisis of skyrocketing commodity prices in piecemeal like the case of bread prices.
He said, “I think the crisis we are faced with is enormous because all prices have gone up and we need a holistic solution, maybe we don’t have serious economists who are trying to address the economy on how it can be revived. What criteria are we going to follow on being selective on different products. What type of data have we collected to convince us that bread is the priority?”
However, Speaker Among questioned the choice on tax exemption on bread stating, “Amuria will tell you that why not bring tax exemption on salt and sugar? I will also debate for my people in Bukedea, how many people in Bukedea eat bread every day?”
Nsereko however defended his decision saying he is only legislating for the concerns of his voters in Kampala Central and pointed out that he backed the proposal to exempt VAT on cotton seedcake that is required by rural farmers.
“There is no reason for me to disagree with you. The reason we have this platform is to represent the views of our people. When it came to cotton seed, we agreed because it is an input for production somewhere. This is the time for everyone to present a proposal, if you think salt is where there is leverage, why not?” asked Nsereko.
When Speaker put the question up for vote, MPs voted to reject the proposed VAT exemption amendment on bread.