Uganda: MPs Move to Block Taxation of Shs150 Million Car Grant

A number of MPs have vowed to block any attempt by Uganda Revenue Authority (URA) to slap taxes on their Shs 150m car grant.

All legislators are expected to receive Shs 150m next month as facilitation from Parliament to purchase cars. URA has reportedly written to Parliament, informing that the money will attract a tax.

However, Denis Hamson Obua, Ajuri County MP and former Parliamentary Commissioner, says taxing the car grant would be levying double tax on the legislators.

“From the 8th, 9th coming to the 10th Parliament, the issue of taxation of the car grant has not always been handled. What we know, is that, this is a grant, after receiving it, whoever buys a car, pays for the tax component.

So if URA is making a move to tax the car grant of Members of Parliament that in my honest opinion would amount to double taxation. Because at the end of the day when the money is paid, MPs who will move into the market, the car bonds in Kampala or cars from outside the country will still be subjected to paying taxation on their respective cars and that is an issue and an ideal we are ready to work on as a parliament and ensure that it is resolved for once and for all”, Obua said.

Last month, Twaha Sanywa, a concerned citizen, petitioned the Constitutional court seeking to block the payment of the car grant arguing that purchasing the cars amounts to preferential treatment of Parliament over other arms of government.

However, Kabula County MP, James Kakooza insists that URA cannot tax the car grant because it is part of facilitation to help MPs carry out work in the constituencies. Kakooza says if government insists on taxing the money, they should revert the scheme to instead purchase vehicles for MPs, just like it is done for ministers, permanent secretaries, local government leaders and commissioners, among others.

“The mandate of URA is to use the law [as] we give it to them not how they feel. They are giving them [grants] to MPs as facilities like any other arm of government. Because governments can’t afford the wage bill of members of parliament that is why they tell them let’s give them some money to buy a car on your own, you cater for your driver, you cater for your maintenance. The standing order says you have to buy a new vehicle. A new vehicle is about $80,000 plus taxes, so if a member of parliament is given money, he has to pay taxes on that vehicle. So any facility given to a member cannot be subject to taxation. That is why we appealed against it in courts of law”, Kakooza argues.

Article 158(1) of the Constitution states that where any salary or allowance of the holder of any office is charged on the consolidated fund, it shall not be altered to his or her disadvantage after he/she has been appointed to that office.

John Baptist Nambeshe, Manjiya County MP says taxing the Shs 150m grant will reduce the money drastically by over Shs 50m, which is unable to purchase a good car for an MP to use for constituency work, especially those in hard to reach areas.

“If it is taxed it might culminate to Shs 100m or Shs 107m utmost which can not procure a sound vehicle for a member of parliament, so now the behind the scenes manoeuvres are after ensuring that this money remains as Shs 150m without being taxed”, Nambeshe said.

URN has, however, learnt that the car grant could increase to Shs 200m. According to sources in Parliament, the money will be paid in installments; Shs 150m next month and another Shs 50m in March 2017.

Officials from Parliament’s Communications department were unavailable for comment to verify these reports as they are out of the country. A total of Shs 64bn was allocated in FY 2016/2017 financial year to purchase the vehicles for the 427 MPs.