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Sugarcane growers petition Kadaga over 1% tax on agric produce

Tax was implemented on July 1 but the farmers say it will affect their activity citing low prices of sugarcane from millers

PARLIAMENT – Sugarcane growers from across the country have protested the decision to impose a 1% tax on all agricultural produce.

Under their umbrella body, Uganda National Association of Sugarcane Growers, the farmers have petitioned the Speaker of Parliament Rebecca Kadaga, calling on the House to prevail over the tax that they say if implemented would drive lead sugar prices to soar.

Parliament passed into law the 1% tax on all agricultural produce, which legislation under the Income Tax Act came into effect on July 1.

The sugarcane farmers have called for their exemption from the tax, arguing that sugarcane growing is a risky venture that is susceptible to extreme weather and the decision by government is likely to impoverish the farmers.

Isan Budugo, the lead petitioner, lashed out at the Finance Committee of Parliament that handled the Income Tax Amendment Bill for not consulting them, saying if left in place the tax would lead to adverse effects in the industry.

“Exempting farmers from this tax will not only reduce the general cost of production but also reduce prices of sugar on the market. Sugarcane is a political crop because of the number of people involved in it,” Budugo.

He did not elaborate on what makes sugarcane a political crop.

But he said that small scale farmers produce 90% of sugarcane, while sugar companies only produce 10%.

The farmers also say the government, through the tax, could earn in excess ofShs600 billion annually from the sector, despite not investing in the sector.

“The sector has faced many challenges, including low prices due to lack of order. This has made it very difficult for us to move forward. We have been negotiating with millers to increase the prices for the whole of last year but millers are not interested in increasing the prices. Kakira [Sugar Limited] dropped sugarcane price per tonne from Shs175,000 to Shs128,000. Lugazi, Kamuli, Mayuge are giving Shs130,000 per tonne and Kinyara Shs100,000,” Budugo said.

‘Expedite Sugar Bill’

The sugarcane growers also called on Parliament to expedite the Sugar Bill, 2016, whose passing into law hit a snug over allegations of bribery at the Tourism and Trade Committee of Parliament that was scrutunising the draft law.

While introducing the Bill before the committee last year, Amelia Kyambadde, the minister for trade, said the main objective of the Bill is to ensure that there is sustainable, diversified, harmonised, modern and competitive sugar sector to meet domestic, regional and international demands.

The price of sugar currently stands at Shs3,600 per kilogramme, a 30% drop from the Shs4,600 iy was selling at in April last year. Sugar prices hit record high in May 2017, standing at Shs7,000 per kilogramme following scarcity.

Although the sugarcane growers welcomed the Bill, they protested some clauses of the Bill they argued placed more powers in the hands of millers at the expense of the outgrowers, arguing that this would open flood gates of their exploitation.

Section 22 of the Sugar Bill calls for zoning of sugar mills and if passed into law, it would be illegal for the Sugar Board to license sugar mills within 25km radius to each other.

Speaking after receiving the petition, Kadaga stressed the need for an Agricultural Bank to extend affordable loans to the farmers, arguing that funding from commercial banks is too expensive for the farmers.

The Speaker said she would convene a joint meeting between farmers and sector ministers mainly Trade, Agriculture and Finance on the matter.

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