Lawmakers rebuffed a government proposal aimed at exempting the Bujagali Hydro Power project from income tax. The rejection came amidst fervent demands for transparency, with legislators insisting on a comprehensive report from the Auditor General regarding the project’s performance.
During the plenary sitting on Monday, May 6, 2024, Speaker Anita Among presided over a contentious debate surrounding the Income Tax (Amendment) Bill, 2024. The proposal, put forth by the Minister of Finance, Planning, and Economic Development, Hon. Matia Kasaijja, sought to grant a one-year income tax exemption to the Bujagali Hydro Power project until June 30, 2025.
The rationale behind the proposal, as articulated in the minister’s letter, was to mitigate potential increases in end-user tariffs pending the Auditor General’s report.
However, at the committee stage, lawmakers expressed overwhelming dissent towards the proposal. Members of Parliament (MPs) collectively called for a clear timeline for the submission of the Auditor General’s report, emphasizing the need for informed decision-making. Notably, concerns were raised over the significant revenue foregone by the government since the initiation of tax waivers in 2012, amounting to an estimated Shs380 billion.
Hon. Abdu Katuntu, representing Bugweri County, underscored the lack of clarity regarding the status of the audit, cautioning against passing legislation without concrete information. Similarly, Pakwach District Woman MP, Hon. Jane Pacuto, voiced public skepticism regarding recurrent tax exemption requests in the absence of the Auditor General’s report.
The Leader of the Opposition, Hon. Joel Ssenyonyi, echoed these sentiments, emphasizing the necessity of a well-informed decision based on the Auditor General’s findings. Hon. Patrick Oshabe, representing Kasanda County North, questioned the rationale behind perpetually granting tax exemptions to the Bujagali project despite its profitability.
In response, the Minister of State for Finance, Hon. Henry Musasizi, committed to expediting the processing of the Auditor General’s report within six months. Speaker Among guided the minister to reintroduce the proposal through an amendment following the report’s submission.
Additionally, MPs rejected a proposal to broaden the scope of capital gains tax to include land sales in cities and municipalities, citing concerns about fairness in taxation. However, they approved income tax exemptions for specialized hospitals, aiming to foster investment in specialized medical services and curb medical tourism.
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