KAMPALA: The government’s decision to directly charge coffee factories is irritating coffee processors in the Bukomansimbi district, saying it is likely going to force them out of business. In the 2018/19 budget framework, the government introduced a one-percent direct tax on coffee buyers and processors as one of the ways of ensuring inclusive tax contribution by all Ugandans.
But the levy, categorised as value added tax, is perceived as inconsiderate and rough by the members of Bukomansimbi Coffee Processors Cooperative Society, who now want the government to reconsider it to save their businesses from collapsing.
Joseph Mbaziira, the Chairperson of Bukomansimbi Coffee Processors Cooperative Society, says that they are afraid that many coffee factories are likely to close shops because of the high costs they incur in the production processes.
He says that although the government didn’t enforce the tax immediately, they have lately received invoices requiring each coffee factory in the area to pay Shillings 5 million to the Uganda Revenue Authority (URA) as a direct tax.
Mbaziira explains that the coffee dealers already pay several taxes and utility expenses, arguing that it is improper for the government to subject their businesses to an additional levy.
Vincent Ggaliwango and John Mary Lyazi are both coffee processors in Bukomansimbi district. They note that, besides the tax being inappropriate, the demand notices were issued without any assessment to establish the incomes of each processing factory.
They have blamed the government for primarily looking at collecting taxes from their businesses without creating for them a conducive environment within which they can operate. According to Ggaliwango, many processing factories in the area are operating with huge bank loans, meaning that subjecting them to any additional tax will force them out of business.
The coffee processors are considering petitioning parliament and the Ministry of Agriculture to express their grievance against the tax with threats of closing their businesses in protest. Ibrahim Bbosa, the Assistant Commissioner of Public and Corporate Affairs at URA, told URN he needed time to study the complaints raised by the processors.
Fred Bwino Kyakulaga, the State Minister in Charge of Agriculture, has appealed to the coffee processors to remain calm, saying that their concern has been presented to the cabinet, which will soon come up with a position to guide on the next course of action.