The Speaker of Parliament Rebecca Kadaga has promised to mediate between the ministers for trade, agriculture and finance and sugarcane growers in a bid to seek a long lasting solution to problems in the sugarcane industry.
The Speaker gave this assurance while receiving a petition from the Uganda National Association of Sugarcane Growers who are seeking exemption from paying one per cent withholding tax provided for in the Income Tax (Amendment) Bill, 2018.
Represented by Isa Budhugo, the Chairman Busoga Sugarcane Growers Association, the petitioners said the tax on the gross amount of payment of sugarcane in excess of shs1 million as prescribed in the Income Tax (Amendment) Bill 2018 was unfair.
“If the withholding tax is meant to be charged on profit, and we are not getting profit, then it becomes irrelevant. The price was deliberately reduced by millers to shs100,000 and now there is no profit,” said Budhugo.
The petitioners called on Government to bring sugarcane farmers and millers together in a bid to establish a fair sugarcane pricing formula or factors that ought to determine sugarcane prices.
“Such factors should at the minimum enable farmers to cover the cost of growing, harvesting and ferrying of the cane to the factory and their profits,” the petition read in part.
Dr. Ibrahim Micheal Okumu, an Economist and sugarcane grower, noted that the costs incurred by a sugarcane out-grower from the production process to the mill wasn’t reflected in price determination, hence losses for the farmer.
“The regulatory framework must be clear and speak to what kind of costings ought to be captured on the price determination framework,” said Dr. Okumu.
The petitioners noted that the Withholding Tax had been introduced in the Bill without involving sugarcane growers,
“… yet Members of Parliament from sugarcane growing areas had not enlightened their constituents about the tax,” said Budhugo.
The Speaker called on the petitioners to exercise patience as an appointment is sought for them to express their concerns to the line ministries concerned.
“I will get to the Prime Minister and the three ministers, agree on a date and let you know when to meet them so that you can tell them this yourselves,” said Kadaga.
On withholding of tax on payments for agricultural supplies, the Income Tax (Amendment) Bill 2018 proposes that a person who makes a gross payment for agricultural supplies in excess of shs1 million shall withhold tax on the gross amount of the payment at the rate of one percent, if the payer is designated by the Minister to withhold tax.