The Alcohol Manufacturers Association of Uganda and the Uganda Water and Juice Manufacturers Association have petitioned President Yoweri Kaguta Museveni, over what they say are the crippling costs of implementing Digital Tax Stamps (DTS).
Digital tax stamps (DTS), are digital marks placed on excisable products that make it easy to trace the products for purposes of increasing tax compliance of the products. In Uganda, the stamps were introduced in October 2019 and are mandatory for spirits, tobacco, beer, water, sodas and wines- either produced in Uganda or imported.
Each stamp will cost, UGX15 per water bottle, UGX50 per bottle of beer, and UGX185 for wines and spirits.
In the online petition, titled: Save Uganda’s Farmers, Retailers and Distributors’ Livelihoods – say #NoToTaxStampCosts that can be found on this link: http://chng.it/Y9pNBJnMds, the two associations say, that while their member industries have complied with the law and affixed these digital stamps to their products, they were now worried that government was going back on its earlier promise of bearing the costs of the stamps.
The petition has so far gained, over 500 signatures.
“Our member industries were appreciative that the Government had recognised the severe impact that imposing these costs on industry would have and as a result agreed that Government would bear the cost of DTS. However, despite Government’s previous assurances, we have now been informed that manufacturers will start bearing the cost of DTS, effective 1 July 2020,” say the petitioners adding that this will on average cost UGX15 billion per manufacturer annually.
The petitioners contend that this will increase the cost of operating by at least 20 percent and that will subsequently necessitate an increase in the prices of their products t consumers, yet a rise in prices will subsequently drive down the volumes consumed. This will then hurt both direct and indirect jobs, such as with distributors, retailers, and the farmers who supply raw materials used for making especially sorghum, sugar cane, barley, milk, cassava, and maize.
Strong Vote of Confidence: Mbire Reappointed MTN Uganda Chairman“This UGX 15 billion per manufacturer per year cost will radically increase the costs of doing business for Ugandan manufacturers, with far-reaching consequences for all parts of their Ugandan value chains, including farmers, retailers, distributors, government and consumers,” the petition further reads.
The petitioners say that up to 50,000 farmers will be impacted with up to UGX10 billion in revenue potentially lost in household income as a result of reduced demand for raw materials. Up to 88,000 retailers and the 352,000 households they support may also be affected.
“As a result, the government could also lose up to UGX6.6 billion in tax revenue, and its policy of low-cost domestic manufacturing undermined. The lower manufacturing output could lead to lower overall tax revenue from reduced sales. There will also be a further reduced tax revenue from consumers switching to untaxed illicit goods. Government’s post-Covid-19 recovery plan will also be defeated,” further contends the petitioners.
“All our efforts to obtain reassurance from the Government that it will cover the DTS costs beyond 30 June 2020, have so far proved futile. We have been left with no other alternative but to request your help. If the industry has to pay for tax stamps, the livelihoods of farmers, retailers, distributors, and the public will all be drastically affected. The situation is even more pressing as a result of the Covid-19 pandemic which has severely impacted the operations and extensive supply chains of the very industries that will be affected by the imposition of DTS costs, “the manufacturers say in their petition to President Museveni.
The petitioners want President Museveni to weigh in and ensure the government continues to meet the costs of DTS, “allowing manufacturers, farmers, retailers, distributors, and the public to survive the ravages of Covid-19.”
“We appreciate and commend the leadership of H.E. President Yoweri Museveni in mobilizing Ugandans to stay safe from Covid-19, which has ensured no deaths in the country so far. The President has rightly identified manufacturing as one of the elements of the critical economy and has taken the necessary steps to protect it from unnecessary Covid-19 impact.
