In Summary
  • The Uganda Cooperatives Savings and Credit Union Ltd last month petitioned the parliamentary committee on Finance, opposing the reinstating of taxes on Saccos, saying it is double taxation since they already pay a number of taxes, including Pay as You Earn, local service tax, income tax, withholding tax and operation tax among others.

KABALE/MASINDI. Government’s plan to impose 30 per cent tax on Savings and Credit Cooperative Organisations (Saccos) continues to receive sharp criticism from cross sections of the public, with the latest coming from Kigezi and Bunyoro sub-regions.
Leaders and residents there say the proposed tax will curtail access to finance by those running small scale businesses
They add that taxing Saccos will force people to turn to primitive ways of keeping money under mattresses and in pots. Others say the tax will increase the cost of doing business.

The Kitanga Catholic Parish Priest, the Rev Fr Gaetano Batanyenda, says taxing Saccos is like subjecting a sick person to blood donation or milking a starving cow.
“A year has not lapsed since the minister of Finance exempted Saccos from taxes for 10 years. It is now disturbing to hear that plans are underway to reintroduce the taxes,” says Fr Batanyenda, who is also the founding member of Rukiga Sacco that operates in Rukiga, Rubanda and Kabale districts.

“Now I have heard that the government is introducing taxes on Bibles, Korans and other prayer books. Instead of becoming desperate for taxes, government should instead look at cutting costs as a result of creating new districts, municipalities and town councils,” he adds.
Mr Winston Agaba, a horticulturalist, says the proposed tax shows that government is not interested in supporting rural development.
“In reality, it will be us the borrowers to pay this tax because the Sacco will factor in that cost while disbursing loans to the communities. This will constrain uptake of those loans and limit growth of enterprises run by borrowers as well as lending institutions,” Mr Agaba says.
Rubanda West MP Denis Sabiiti says the tax defeats the reason why the Saccos were introduced.

“Taxing Saccos means that the burden shall be put onto the local person whose saving culture had improved and people will go back to keeping money in their homes. This will not only bring insecurity but also economic downturn,” Mr Sabiiti says.
He says the Saccos have spurred growth in rural areas and instead government should extend more grants to them instead of taxing them.
“I will oppose the Bill on taxing Saccos once it is brought before the floor of Parliament because it is fighting community development,” Mr Sabiiti adds.

However, State minister for Planning David Bahati last week said only Saccos making profits would be taxed.
“We are trying to ensure that big Saccos also contribute to the government’s tax revenue. We need to treat them like any other businesses and many of them actually make billions in profits, so we want to impose a 30 per cent cooperation tax. This tax will only be a fraction of their net profit,” said Mr Bahati, who is also the Ndorwa West MP.
He was officiating at the closure of a one-week training course by Enterprise Uganda in Kabale District.

Contradiction
At the same function, the executive director Enterprise Uganda, Mr Charles Ocici, said the exemption of Saccos from tax should stay if government is to achieve the goal of supporting entrepreneurial growth across the country.
Residents of Masindi District have also opposed the government proposal.
Speaking at the Forum for Women in Democracy engagement at Masindi Municipal Council hall recently, women said the tax will chase away people from Saccos.

Ms Harriet Muhumuza, a shareholder in the Masindi Market Traders Sacco, said they already pay registration fees and described the proposal as double taxation.
Ms Jackline Emwelu said the tax will discourage people from saving.
Ms Monica Tibemanya, the Masindi Municipality commercial officer, asked government to enlighten the people on the proposed tax before it is debated upon and effected.