The Kololo traders meeting had been billed as a collision of the titans. After a rowdy traders’ strike and the subsequent discussions involving traders’ leadership, URA and the president, it was anticipated that the Kololo meeting was going to be fireworks, where traders would vent out their anger to URA. There were general fears that because of the large numbers expected to attend, there would be commotion leading to riots or rowdy scenes. It generally passed off with minor incidents of discomfort. This was not by default, but by design of an experienced hand of a leader who has faced such scenarios through his leadership journey. The president read the mood and exercised patience, listening to traders for over two hours, giving chance and time to whoever was on the microphone to express their concerns.
The traders’ message was varied in both tone and content, sometimes bordering on an emotional slant. Whatever the traders were saying was valid, only that some didn’t have enough information about issues raised and even those who seemed informed, took a populist stance. This worked up the emotions of the crowd, leading to ugly scenes of commotion and walkouts. In a crowd of thousands, such incidents aren’t uncommon. It took clear headedness of the president and his leadership qualities of patience and accepting people as they are, for the tempers to cool down. When it threated to run out of hand, the president stamped his foot down. He made it clear that he wouldn’t be intimidated and asserted his stand that whoever wanted to cause confusion was free to move away. It takes a leader of certain quality to take a firm stand in the face of a charged crowd.
After these skirmishes, the president responded to each of the issues raised by the traders. Of course the traders’ expectations were high and expected the president to say only nice things to their ears. In the meeting, two things came out clearly. The first, was that either the traders were ignorant of EFRIS or they were just playing the fool to call it a tax. From what the traders’ leadership said, it was clear there was a gap in the URA sensitization drive. Most traders expressed ignorance of its application, though the reality is that they were acting. Irrespective of the drama, the president listened to all of them. The second scenario that came out was an attempt to use crowd violence to intimidate the president into giving in to their demands. It was a futile attempt that the president thwarted decisively.
In the meeting, four salient issues came out. The first is that EFRIS was to stay irrespective of the opposition of the traders, URA was instructed to intensify sensitization and training of its application by traders. The cost concern was addressed by allowing alternative means of tax returns like use of mobile phones or laptops and desktops. The opposition to EFRIS is not actually about its application, but the fear that it exposes the business transactions to the taxman. There is a lot of tax evasion due to manual tax assessment and returns. The entry of EFRIS reduces the chances of tax evasion. To a trader, EFRIS is too invasive into their business operations, exposing their tricks.
The second take home was that VAT would remain at 18% against the demands of traders for 16% reduction and call for increase of 150m threshold to 500m. What is clear is that the call for increased threshold, is an attempt to leave a big number of traders outside the tax bracket which would have a negative effect on URA collection. The bulk of the tax payers, fall within the annual 150m threshold, so any rise in the figure would adversely reduce the tax collected.
The third issue was the president’s stand on textiles. The president justified the 35% levy as a prohibitive tax intended to protect local textiles. The local textiles can’t compete with imported textiles due to the price difference. The local production has not yet gained economies of scale to favourably compete with international producers. Though the president promised traders to discuss the issue of weighing textiles in kilograms to determine the tax payable, he implored the traders to understand the rationale behind it and then he promised report back after consultations with the technical team.
The fourth take home, was that foreign investors should not involve in retail trading, but use wholesalers and dealers in the distribution chain in order not to edge out the local traders. This was a big complaint by traders. However, one pertinent question was posed, what if the local traders don’t stock their products in preference for similar imported goodsThis may ultimately affect the manufacturer and the solution is to open up outlets which directly compete with the local traders.
The issue of punitive penalties was resolved by suspending the already imposed ones, but not vacating it totally since it’s a creature of law which can only be amended by parliament. However, new culprits would still face the law. It should be, however, noted that penalties are imposed to serve a specific purpose of deterrence. A trader contemplating evading tax will first think twice before engaging in the mischief. The president took them through the purpose of taxes.
The candid talk made it clear that we all have the obligation of paying taxes, though the cannons of equity and productivity must be observed. It was pointed out that the more people pay taxes, the more the burden is spread out and little effect will be exerted on broader shoulders.
The meeting ended by the president promising to meet leaders of traders to iron out the outstanding issues that emerged in the meeting. The Kololo meeting was the beginning of a series of engagements with traders to avert the disruptive strikes by the traders.
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