FDC promises to cut taxes if they win 2011 elections

Dear Ugandans at heart,

Let me assure you all  that FDC will  surely cut taxes and fight corruption.Give tax  holidays  to companies that create a certain  agreed number of jobs. Pay higher wages to the lower ranks in public service. Bring more people under the tax brackets by using low taxes and better social services.

Yes, It  is all thought  out.It is not cheap politics.It is real. We shall make a contract with the people of Uganda and give them  a timeframe for every thing promised.We have analysed the budget for  a number of years.We know how much is stolen by NRM leaders annually. It is now about $1billion. Just plugging the theft holes will leave a lot of money in the public coffers for services and development. NRM LEADERS CAN NEVER STOP STEALLING THIS MONEY.NEVER, BECAUSE THEN THE REGIME WILL COLLAPSE. IT IS BUILT ON CORRUPTION.

Low taxes  and increased wages will mean more savings and more investiments, more consumption and more production, therefore more jobs and more stability .

Many Ugandans seem to be stuck in the moribund Musevenomics of formalised corruption, silly  economic experiments, handouts and patronage benefiting mainly those to keep their regime alive, the so-called middle class who do not produce but steal and accumulate primitively.

Please know that ours  will be an economy centred on the ordinary person, putting more money in his pocket, improving his welfare, giving him  production skills, creating jobs for his children, improving on his food quality and health, availaing him farm inputs, seeds and tools, guaranteeing market and stable prices for his produce thru setting up strateguc  food stores to stock when they is a glunt and sell when there is a shortage.
It is not an obssesion. It is economics.We shall  definitely cut taxes on basic necessities for ordinary people, on salt, soap  sugar, paraffin, matches, hoes  textiles,(even on beer so that cheap fake waragi does not kill so many).Yes, compared to their incomes, ordinary Ugandans are surley  inderectly overtaxed thru these items plus on transport due to high taxes (almost shs 1,000 per litre of petrol for example).
WE shall also focus  more on local investors.They will enjoy incetives, easy access to cheap long term loans and generous tax breaks on  jobs created. It is Ugandans who will develop Uganda not those fake investors of Museveni. He prefers them because he fears RICH  Ugandans as they could oppose him more effectively.
Taxes come from production and consumption of goods and services.That is the key. Have a beer of Shs 1,000 and sell a billion bottles  and collect  shs 200b taxes at shs 200 instead of at shs 2,500 and sell  300,000 bottles collecting 150billion at shs500 taxes.

Wafula Oguttu

FDC spokesperson


35 Comments so far. Leave a comment below.
  1. Mr. Wafula-Oguttu:

    Ok, but whose taxes will you cut? Will you cut PAYE so that the suffering Ugandans who work hard can have more disposable income to consume or save as they see fit or will you cuts taxes on mivumba so that Ugandans can afford them?

    On tax holidays, why should the Ugandan treasury forego revenue only to end up in the USA , Canadian or British treasury? Those foreign firms that get generous tax holidays in Uganda pay taxes to their respective countries. This is real and Mr. Cliff Musiimenta an FDC damu can tell you the same thing. How can you talk of fixing tax loopholes while promoting tax holidays? That is the biggest leakage of revenue from Uganda .

    You say “bring more people under the tax brackets by using low taxes and better social services”. Are you saying the high tax rates are encouraging tax evasion? If you are talking of introducing social insurance numbers for all Ugandans including those in the private/informal sector such as Owino, Kikubo etc, for taxation purposes I say ok.

    Only in Uganda can you have a situation where people who make millions pay no income/direct taxes. Do you agree with me that many folks who work in Kikuubo/informal sector make a lot more money than the folks who work for the Monitor or even URA, yet pay no taxes? Or if they pay any taxes at all, they pay way little compared to the income they mint?

    Have you ever wondered why folks who work in the private, but especially informal sector have a lot of disposable income to spend? They do because they pay no or very little taxes.

    You are actually making the Republican aka Supply side argument on taxation. It is well, voodoo. And in any case, it can only appeal to those with income to tax. And what about the majority of Ugandans with no income to tax? What is in this tax cuts mantra for the folks who are unemployed? Why are you so focused on imaginary higher taxes? Is it because YKM eliminated the poll tax so you have to match his stupidity?

    Bill Clinton proved that you can raise taxes and actually grow the economy. Because of higher taxes, he balanced the budget and eliminated the budget deficit. And there were plenty, I mean plenty of jobs. As a result, the govt revenue improved into surplus. I have quoted the legendary supreme Court Oliver Wendell Holmes who famously observed that taxes are what people for civilization.

    Go to Sweden and see it in action. The folks there live like Kings! It is perfect social welfare state and the Swedish do not mind. They are even funding opposition parties in Uganda dying to cut taxes!

    Now how will you pay for better social services if you cut taxes? Where will you get the money to fund those better social services?

    You write “Low taxes and increased wages will mean more savings and more investiments, more consumption and more production, therefore more jobs and more stability”. This is the textbook case. A lot more remains to be done.

    I do not believe for a moment that most Ugandans are not consuming because taxes are high. Why are you laughing at Ugandans? They are not consuming because they have no disposable income period. No jobs. And the agriculture sector which once supported rural households is in tatters. There is nothing in your proposal to improve the earning capacity of most Ugandans.

    Actually, your proposals could make things worse especially your proposal on Mivvumba which has serious backward and forward linkages. It would kill the cotton sector period. That would translate into less, not more rural household income. Also it would kill Nytil, ATM etc and create massive unemployment.

    Now will you also make a contract with Ugandan farmers that FDC will not subsidize the urban riff raff at the expense of hard working rural farmers? Will you let the market forces determine the price of farmers produce in urban areas? I understand now authorities cheat the hardworking rural folks who toil to grow food, but have to subsidize the urban bums. That is taking money away from hardworking farmers to lazy urban bums. It should end.

    African regimes and the media in particular is fond of complaining of high food prices aka inflation, essentially calling on the state to intervene to deny farmers their hard earned dues. What is you position on farmers subsidizing the lazy urban bums? Do you think Ugandan farmers owe urban folks a decent living at subsidized prices? I suggest you liaise with Mr. Musiimenta on taxation because you are making big mistakes.

    But why not drop this tax obsession? Is it really true that Ugandans are over taxed? How come there have been no “obwediimo”/riots over taxation as was the case in the 50s?


  2. Sorry, but this is what I don’t like about Besigye’s cheap politics – telling people what he wants them to hear!

    We all know that taxes, if properly used, result in better social services. Can he tell us how he is going to go about solving these? Through hand-outs from foreign countries again? Nääej! Not with me. “tubakoye”, like Rehema would say……

    Please, advise me on this one.



  3. Nyar,

    This issue of taxation and tax management is a big topic, today URA loses alot of taxes in tax evasion due to the failure by the taxation policy in uganda to adress the equity principle of taxation.

    What Besigye is talking about is possible, if you charge a smaller tax, you increase the tax base since more people join the consuming group hence increasing the amount of tax collected.

    Jude m

  4. Mayanja,

    Last year, the German people themselves asked their government to increase their taxes so as to improve the quality of their social services. In Sweden, surveys have been made several times where people have shown that high taxes with high quality social services in return is all they prefer……………



  5. Jude
    You do not solve the tax problems you have mentioned by cutting taxes.
    How can you solve tax evasion by a reduction of tax?
    People are avoiding paying taxes because the system has loopholes, which need to be closing. It is also fair to say tax administration in Uganda sometimes involves politics and they use it to make people submit to the regime, some people do not pay taxes due to the links with the government. These things cannot be solved by tax cuts.
    The tax system needs addressing. The role of taxes is to raise revenue to fund public services.
    The first thing, which needs to be done, is to address the wages of workers in the private system. We need to introduce a minimum wage in the private sector and a living wage in the public sector.
    We also need to address our data management system, employers should have information of the people they employ. We can improve this by introducing one payment method of wages in private sector, through the bank. It would be a necessity for each worker to have an account where his or her money would be paid.
    This has an advantage that it can improve on the saving levels, plus banks will then have the initiative to open up branches in most parts of the country thus improving the financial systems in Uganda . There could be a problem of bank charges, but you can pay for this by reducing the Company Tax and make companies pay to banks a charge for handling their employee’s salary. This means then the banks would introduce salary accounts, which they do not charge fees.
    There is also a need of a capital gains tax plus a higher tax rate for high-income earners. This will enable redistribution of income.
    You see this is the problem we have with our parties, they don’t have any policies and the few they have are personally preference and not that these have been analyzed by experts. I find such talk to be irresponsible and to me this is the reason I feel parties have a long way in having the structures which thing about what the issues are and how these can be solved.
    I will remind of a time when M7 thought by solving the corruption in police was to remove them from the road. He failed to understand the role of traffic police. It has taken the government to spend more money just training new officers. This type of politics we have to reverse.

  6. saac,

    Economics is more complex than politics, there are so many theories that can be used to contend issues. In your own words you have already used a proposal to reduce some taxes “There could be a problem of bank charges, but you can pay for this by reducing the Company Tax” How do you differ from me and Besigye?

    On tax evasion, I will tell you to investigate how they tax imports in Uganda and see that the real tax is 64%. That is already abnormal and in order for one to survive in business, evasion will be the answer.

    Jude m

  7. Mr Balamu:

    I fear that the opposition with less than a year to go is still making incoherent statements on important national issues. By now, they should be revising and updating their manifestos. For example what is their version of Bonna Bagagawale? BTW, what is the goal of Bonna Bagagawale? Whom does it target? What sectors does it fund etc?


  8. WBK

    I am surprised too. What is worrying is the fact that they are not even prepared to lead, though they claim if the election is not rigged they will win.

    I think it is the effect of the movement system, which looked at promoting individuals other than policies. The opposition is still conducting itself movement wise, this the reason they have speak a lot of time trying to sell a particular candidate other than come up with policies to counter the government’s. They have failed enlighten the public of the flaws in certain policies and how they would do things better.

    I believe that is how you gain support, you have to target particular section of the voters and try to sell them a product you feel will convince them to vote for you.

    If you look at the government programme of Bonna Bagagawale, it has many weak points the opposition would point out, but they have left it go unchallenged.

    Uganda is a predominately-agricultural country. We have now a quote to supply so things to the US market for example garments. For a region like Busoga, which has Nytil and grow cotton? If you propose to put more money in industrializing of the growing of cotton thus creating jobs in both the farms and the factories? If the opposition came up with such a plan of reviving cotton growing in Busoga, that would be a selling point for the voters in Busoga.

    If you look at creating jobs. First you define the roles to create and how. One of the problem we have in Uganda is the lack of planning, both at local and national level. If make a law where each sub county is required to have a planner that would create jobs for students who did urban planning. If a similar thing is done for procurement, this time at district level, jobs are created. If you do this for those skills, which are a necessity in any area, you pull off many students from the street. To me it is point less for you to admit students on district quotas when they cannot come back and work for the district

    We have today companies who are have been given tax incentives but no criteria was followed, it is not clear if these companies are required to create a certain number of jobs.

    There are many problems, which the opposition should be formulating answers. it is good we are having a debate on taxation.

    I wish they could put out their proposal on other thing so that we can guide them. You see we need a starting point and without their policies, we cannot even constructively criticize them.

    The other I heard Besigye tell the people of Lango, they plan to increase the salaries of teachers, which is a good thing, my only criticism was the figure he was talking about didn’t seem affordable due to the number of teachers we have and need. I think they falling prey of the gimmick politics of Museveni


  9. Mr Oguttu

    Is it possible for you to post here the numbers and those particular taxes you plan to cut. The tax, which affects all Ugandans, is VAT, so how much are you going to cut that by and how by cutting VAT can the disposal income of people increase yet the majority of them do not earn an income.

    Apart from those people in the public sector, how many people in the private sector pay income tax and how do they pay it?

    I do not think the priority of a future government should be to reduce taxes. I think it would be to create jobs.How does FDC/IPC plan create jobs?


  10. Oba PaAb,


    I think you and FDC should concentrate on removing Mu7 and his NRA/M-O from power through the ballots!

    I seriously worry about this your delving into debating tax cuts when, first you must clearly define the ideological direction of your party. Of course FDC is fighting for the Ten points program, BUT under IPC you must remember that you are trying to cooperate with other parties, some of which, ideologically, are either confused or further to the right.

    Focusing on removing the regime from power for now, would be the ideal thing to do; tax cuts plus other ideological direction for each party, can be debated later when eventually, after the transitional period, parties will present their ideas, through campaign, for leading the country.


  11. Wafula Ogutu,

    We intend to remove Museveni from power using ballots not bullets. To get the ballots we must have convinced the voters with policy promises. The tax issue is one of them.
    Even under IPC, we shall have to agree on a minimum programme binding us together and on what we base our contract with Ugandans.

  12. WB Kyijomanyi,

    Mr. Wafula-Oguttu:

    I understand your argument, but I am not convinced. Tell your-FDC-economists to go back to the drawing board. You must have some conviction other than promising to cut taxes. If I were you, I would emphasize, jobs, jobs, jobs and not laugh at suffering Ugandans with empty tax promises.

    I appreciate your-FDC- effort to center the economy on the ordinary person. So let us look at her needs and conditions. What are her needs? You say tax cuts. No. she needs a job or support to make an honest living through agriculture or fishing. Give her the job before you can give her that tax cut. Support her efforts in agriculture to earn decent money before you can offer her that tax cut. Give her loans to strat income generating activities before you offer her the tax cut. Formulate policies that will rejuvenate Jinja’s industrial base so the firms can hire workers before you can give them that tax cut and so on. They will only appreciate your tax cut if they have income to qualify for tax relief. Right now, you are actually mocking them.

    Easy access to long terms loans. Good. But where will this money come from? Resources are limited so you have to prioritize .

    Now let us be clear: are you against indirect taxation? Then say so. have the courage to tell Ugandan that if elected FDC/IPC will do away with VAT. But your economists should know that VAT is an efficient tax. What are your going to replace it with?

    “Taxes come from production and consumption of goods and services.That is the key. Have a beer of Shs 1,000 and sell a billion bottles and collect shs 200b taxes at shs 200 instead of at shs 2,500 and sell 300,000 bottles collecting 150billion at shs500 taxes”.

    Not true. Ugandans have their favourite alternatives in the form of Enguuli/Chaanga/Kwete/malwa/chibuku. The key is income. Surely, malls and shops are full in Uganda and those with money have no complaints. It is only those without income who cannot afford to consume so even if you cut taxes without giving them the opportunity to earn some income to either consumer, save or invest, your tax cuts are like crocodile tears to them.

    I hope you recognize that we are actually trying to help you wake up and craft policies that add up.


  13. Wafula Ogutu,


    FDC economic philosopy and focus is to give the fisherman a net or hook not fish. That means create jobs, jobs, jobs at all levels in all industries and trade for Ugandans not Asians and other foreigners. Foreign investors will have to prove that they have actually brought in the minimum of $200,000 before they are given a licence to set up a business. Those without that kind of money will not be allowed to come in take our
    jobs except if we need their technical skills.

    There is plenty of money.It is simply misused. Government will have money for investors to create jobs and increase production.

    We are not against indirect taxes.They are smart and good. We are against high taxes on basic necessities of poor people.

  14. kk,

    tax is not the problem. the problem is not using the tax well to save people. and tax cutting is not the main need for us but federo. it will erase all economy problems. every area has its main issues that will be solved by the people in that area who know it better.


  16. Dennis Boot,

    Has someone said there is not enough money? Come on, if we can afford to spend 300million on the president (as reported in today’s observer), what are you talking about? Think of how much we would achieve with just ten percent of that!

  17. Dennis Boot,

    Has someone said there is not enough money? Come on, if we can afford to spend 300million daily on the president (as reported in today’s observer), what are you talking about? Think of how much we would achieve with just ten percent of that!

  18. Mr Wafula,

    Mr Kyijomanyi has pointed out very specific issues that question the rationale of your declarations on the country’s economic future and those issues need to be addressed specifically. All that he has done is to indirectly ask you to take us through the FDC’s thought process that underlies your declarations.

    It does not help the FDC for its publicity guru to just come on a public forum and make statements that anybody else can make, declarations that many others, even Idi Amin, made. If you do not give us even a passing snapshot of the thinking behind your declarations, they only remain rhetorical ploys and loud-sounding nothings.

    It does not help either to dwell a lot (or at all) on personal attacks on the person you are trying to replace. There are quite a number of other minds, simpler ones, to do that. As a group intending to take charge of the country, show us you are quantum thinkers; capture our imagination.

    Thus far, you are spending much of your time insulting YK Museveni and calling those that question your thinking Museveni agents, etc. What you are saying does not tell us anything on the amount of effort you are investing in reflecting on where the country is right now in all areas of public life, where it should be according to your plans and how you intend to take it there.

    For example, you are telling us that you are going to cut taxes. Just that declaration is actually enough to have you written off as serious contenders for taking charge of moving Uganda out of the mediaeval era. Which taxes do you mean? Is it not true that only 5% of Ugandans pay taxes and the majority inhabit the non-monetised sector of the country’s economy which is totally out of reach of even the most rigorous fiscal policy?

    Lance Corporal (Rtd) Patrick Otto

  19. WB,

    I have missed some bit of a very good debate.

    I will put this to you clearly, you seem to be looking at the common man the way FDC is doing. However you are only missing one fact that the economy works as a whole and has various formulas which work as the prerequisite to the other. By touching one factor in the Monetary and fiscal policies, other variable in the economy such as employment, consumption, production,inflation, investment etc are affected.

    Jobs can not be created from the blue, you must touch the taxation and the govt expenditure patterns, or you can decide to approach it from the cost of credit,supply of money and availability of money or you can decide to use both by employing tools from the two policies.

    Whatever the case, an economy is managed on different formulas and all depends on how you balance you fiscal and economic policy tools.

    Finally, we are living in two different worlds all together, this debate may not be easy for those outside Africa to understand because the level of development in the western world is not similar to that of Africa and as such the development stimulator can not be the same.

    Jude m

  20. Dr Adyeri,


    i salute you and welcome myself back to the dialogue.

    as a citizen of kenya but with roots going back to uganda, i can only wish you luck. however, please ensure that you do not go the way our coalition went. many promises were made and instead, when our coalition members got there, they started fighting for their own tummies. Brother it has been frustrating.

    we however have hope that uganda is more serious. seriously. whilst we were prospering as a country, we have always know that the day ugandans get serious it shall be one roller coaster ride. u are blessed with many cultures and when you learn to celebrate & tap the benefits of your differences instead of this current tribalism, you shall have arrived.

    then you may instead of cutting taxes and squeezing the presidential budget … instead apply it more usefully. i say this because you have to remember that being a president in uganda is not easy; given the country’s history and profile. unlike kenya, the presidint of uganda has to be on his feet 24/7. we cn see it all the way from here and believe me we have a better perspective of uganda than those within.

    cheers and we wish you successful elections.

    Dr Adyeri

  21. Michael Senyonjo,


    How are you going to cut taxes when you will also be having a President who needs sh. 300 million a day to run the presidency alone? If you cut taxes, how will yr President run government?

    Michael Senyonjo

  22. Wafula Ogutu,

    The topic was on cutting taxes.
    But if you want to know, we are going to cut adminstration expenditure big time. We shall start with the State House, the President’s office and its numerous advisors and unuseful President’s foreign trips, large cabinet, useless RDCs, unviable districts, abused government vehicles, useless holidays, useless wars or deployment of UPDF in foreign lands and plug holes for corruption. Almost half of the presnt budget will be saved that way. The we shall have money to invest in our people’s welfare and production capacity.

  23. kandole patrick,

    Hallo Waf,
    Consumption will not necessarily go up because taxes have been reduced. Your example of more beer to be consumed because of a cut in price should be checked, consult some real economists before sweeping statements. More fuel consumed if price goes down! or more wastage? some of these issues should be analyzed ore critically. It is t be a dicey issue, handle it well. True small businesses have been taxed out of existence but the fiscal policy must be handled carefully. How about revenues for Local governments where generally the population is deemed to be poor. Who should pay for the cost of these services if FDC removes some of the taxes.
    We should avoid causing excitement. lets have a systematic debate on these issues, how about the EAC treaties…

  24. Wafula Ogutu,

    Bwana Oba,

    I know for sure that many consumers drop off when prices go beyond their incomes.But the aim should be to have as many consumers as possible so that every one is in the economic loop producing and consuming, exchanging goods and paying friendly taxes. That is what you call a national market and a trully national economy.
    An economy whose crucial sectors like banks, industries and transport are controlled by foreigners in the name of liberalization as is the case today in Uganda is totally unacceptable.

    We must proactively do everything possible to put the major aspects of the economy in the hands of Ugandans. Local investment in production of goods and services consumed by the domestic market should be one of most important aspects of our economy. China is a good example to learn from.

  25. Wafula Ogutu,

    We will not chase away foreign investors. We certianly need them.But they should play a secondary role, supplimenting the efforts of nationals, not to be the main players as is the case today.That is superficial and dangerous in the long run.

    Yes, we shall encourage them to list on the Uganda stock exchange especially the banks but not as a token as is the case today.

    Today Uganda has got only one bank, Centenary that can be said to be owned by Ugandans.Even then, it is not 100%. No serious Insurance is owned by them, no communication company is owned by them.

    Yes, employment by whoever is good but ownership and employment by citizens is far better and ideal.That way we shall control capital flight, plough back our profits, expand our economy and build stable country where we all have a sense of self-belonging.

  26. abbey Semuwemba,


    Michael Senyonjo is right to point out the shs.300m spent daily on the president of the country as reported by the Observer newspaper. Reducing taxes is short term thinking when expenditures are growing. A tax cut will provide a short term stimulus to the economy that will offset a portion of the cut but you HAVE to cut spending as well or you end up with the kind of deficits we have now.

    So why dont you tell forumists how much Museveni’s govt is spending on statehouse, presidential advisors, foreighn trips,cabinet, RDCs,holidays, wars,……………. and how much FDC intends to cut down and where,rather than just mentioning the areas where expenditure will be cut once FDC are in power.

    Thank you.


  27. john Nsubuga,


    We should get over it. Uganda’s majority are rural peasants, illiterate or semi-illiterate regardless of your intellectual measurement standards. I see some of you want Waf to start explaining things using your elitist approach that doesn’t appeal to the man on the street/village. When will an illiterate somebody comprehend: deflator Index, Wage Base, income elasticity, annuity, and I don’t know what??. That is what you’re asking him to do. But the man’s English vocabulary is limited to “enkumbivailable, ntambulavailable, dagalaisis, and someropoly”.

    Now I ask you, why don’t you impress these people with your power of understandable examples/explanations, instead of consuming your selves trying hard to show them the example of your inability to explain issues to the them? What do you derive out of explaining things to your selves? I once attended a political rally in Hoima, where I over heard another man ask what the visiting politician had said. The one being asked kept on saying in Runyoro: Eee haaa! omusaija abalize kurungi muno, (his speech/address was really good) but not explaining what had been said.

    Clearly, they both did not understand a thing the politician was talking about with his complex terminologies, and that is a big problem with Uganda’s political elite. They have never heard of ” a targeted/segmented” approach strategy in their lives. Waf is telling you, you want to talk to the ordinary man, then speak his language if you want him to understand you.

    Now, the village man wants more money in his pocked from his small earnings, and how it gets there, he doesn’t care. If you cut taxes levied on fuel for example, he will pay less in transport charges for his maize. Please note! he has no idea how you arrived at that price that allows him to make a saving of 1000sh, and that is exactly what he wants. You do your complex mathematical calculations some where else, all he cares about is value for his money. He wants basic necessities ie. salt, medical care, education, transporting his goods from pint A-B, etc.

    Remember, all he has known all his life is subsistence farming, a legacy left behind by colonialism, and a problem this government is reluctant to improve on. That is pure political anorexia, one that has progressively led to a disfunctional state at best, but likely to sink at worst. I’ve had some of you rightly mention that we have a squeezed tax base, and I can not agree more. What you forgot to mention though is that, from what URA collects, USD 950 million is lost via corruption annually. That is a lot of money by Uganda’s standards.

    Again, my understanding with Waf’s explanation is that, if you close that loophole, the state will have more money on it’s balance sheet, thus allowing it to can cut taxes some where else. Simple and pure. Again, the village boy has no idea how you the elite arrived at all this, all he wants is more money in his pocket.

    For luck of a better example, I will use president Museveni. How many times have you people seen him photographed with peasants deep down in village shambas talking to the have nots? He will not talk to you people here on UAH, because you’re overly consumed with your educational attainment egos. Gasiya kabisa. Now you know why we continue to oppose KB to come here and talk to you. You have more foam to offer than substance in terms of anything that can translate into a meaningful way forward.



  28. peter okello,

    Ndugu Waf,

    SO Waf, the tax cut thing is just a ballot getting thing? You say “We intend to remove Museveni from power using ballots not bullets. To get the ballots we must have convinced the voters with policy promises. The tax issue is one of them”.
    You may actually not be meaning what you are saying but because you need the votes to get rid of Museveni, its okay! Have you heard of the phrase ‘read my lips’ by some US president again on the tax cutting issues?

    Waf, I think it will do FDC no harm to get an economist to spin for it on matters economic! You can concetrate on political spinning!!

    Peter Okello Maber (the NRM ‘spinner’)

    Before I fade out, Waf, what is your take of the Padyere bye-election especially as 2011 nears?

  29. abbey Semuwemba,

    I’m all in favor of shrinking Museveni government and reducing taxes. Lowering taxes will give an economic boost, right? History has proven that reducing taxes increases revenue.
    You write:’’…………….. Have you heard of the phrase ‘read my lips’ by some US president again on the tax cutting issues?’’
    I don’t know what you meant exactly but several US presidents have adopted the policy of tax cuts as a way of increasing revenue in their country. For instance, Kennedy stimulated economic growth with tax cuts in the 1960s; Reagan did the same and the economy boomed, though things didnot work out as he expected. As for Bush senior, he raised tax rates and was rewarded with a recession that cost him his re-election. In the 1990s Republicans forced Bill Clinton to reduce tax rates on capital gains and the economy boomed again.
    Other countries have done the same and benefitted in the process. Estonia did tax cuts and the economy boomed; Ireland became a rich country after lowering their taxes.
    Now, if you admit that reducing taxes provides an economic stimulus, then you ought to admit that raising them will cause an economic contraction.
    When you hear FDC talking about reducing all taxes on individuals, you really hear also the message that they’re reducing taxes on small businesses.
    Now tell me, which would you rather have: low taxes, low interest, low unemployment, high entrepreneurism, low crime, OR high taxes, high interest, high unemployment, low entrepreneurism, high crime?


  30. WB Kyijomanyi,

    Messrs Wafula-Oguttu and Semuwemba:

    I thought you would go back to those FDC economists and reset. But since you are going full steam under the assumption that cutting taxes may be the winning issue for FDC, think again. Do you really believe that people in Uganda who cannot afford to buy a kilo of sugar will finally be able to afford one once you cuts taxes? Do you really believe that?

    I told you that for someone with no income stream, cutting taxes does not benefit her or him in any way? Why? Because her or his disposable income will still be zero. If those economists are telling you that the problem is “too much taxation” and not an income problem, then you are in big trouble.

    Now let me illustrate with examples. The folks who work for Mr. Wafula-Oguttu at the Monitor-where you are a residual claimant-you get to enjoy the profits as a shareholder-are well paid so much so that I understand journalists in Uganda are among the best paid. Good for them! Apparently even mediocre ones command big money. Now assuming this is true, do those chaps have trouble spending and enjoying like there is no tomorrow? Do not they buy bags of sugar and bunches of matooke, bags of rice etc?

    Why do they enjoy themselves so much? Is not it because they have disposable income. The Monitor or New Vision or URA pays them well. They pay taxes but have good disposable income left to enjoy “ensiniya”/trays in Wandegeya, drive Prado or RAV4, live in decent estates and afford endless away games, and send their kids to the elite private schools. Now these folks would certainly have more disposable income assuming you cut the direct taxes they pay-you are keen on cutting VAT, hence the question which taxes/whose taxes would you cut.

    So clarify for us one more time: which taxes are you promising to cut, VAT, PAYE, income tax etc? You have not made the argument why you would cut taxes. Are you trying to cut taxes to starve the ‘Leviathan’ aka big government so the state cannot spend 300 million a day on the Presidency? Are you promising to cut taxes so the government would not have ‘free cash’ to waste around? What is the rationale because the people with no income will get zero, nada, zip, nil, from your tax cutting crusade.

    Actually they would suffer more. Cutting taxes to reduce the size of government would men no money to buy medicine; no money to pay teachers better and above all no money to fund your social services? Once again, where would you get the money to do the things you are promising to do? Would you print money and cause inflation in the process? Or are you counting on foreign donors to fund such programs?

    Now look at the campaign in the UK, yah, Mr. Semuwemba wants the Conservatives to win because it would be good for FDC. So why are they not winning the UK election at the moment? Why are the Tories about to lose an election they thought would be a walk over? Well, according to the respected Economist the problem lies with their shadow chancellor Mr. Osborne who is promising to cut taxes!

    His obsession has created uncertainty among British voters who are afraid that they could lose their jobs if the Tories win and they go through with their promise. Well as they say “kyotonorya tokyesunga”/you can’t take for granted what you have not yet eaten. I urge you to reflect very carefully on your British allies. They are struggling because of their obsession with taxes! And deservedly so.

    I have to be honest with you: if FDC/IPC continues with this cutting taxes obsession, they do not deserve to be trusted by the suffering Ugandans who have no jobs. In short, if you make cutting taxation your leading issue, you deserve to be defeated because you would be a real danger to the poor in that wretched country.

    Your real intention is to starve the government of whatever little money now goes to fund UPE/USE. You want to kill pro poor programs. You will not fool Ugandans with this “cutting taxes” rhetoric.

    The problem facing Ugandans is unemployment not high taxation. Any first rate economist -who has read James Mirrlees-will tell you that and would focus on job creation. It is the economy stupid or jobs, jobs, jobs.

    Where is the evidence that your so called high taxes are killing jobs in Uganda? Why are you mocking the suffering Ugandans with imaginary tax cuts? It is a real pity that you could go to fight such an important national election with such nonsense as your key platform. Sorry, the election cannot be fought over Mmivvumba. Why can’t Ugandans deserve better than mivvumba? Why indeed?

    The Laffer curve-that is the fellow who came up with this supply side voodoo nonsense that cutting taxes stimulate the economy-has been repudiated. I mentioned here that President Bill Clinton raised taxes and did wonders to the USA economy. The deficit was eliminated. Yes. And jobs were plenty.

    Of course with more jobs, the government took in more revenue. The situation was so good that Mr Clinton was able to “end welfare as they knew it”. He could only reform welfare because those who wanted to work could get jobs at decent wages. In other words, you have to create job before promising peoples taxes cuts and not your wrong way.

    Now look at Uganda. YKM’s decision to abolish taxes created perverse incentives. Ugandans toady do not want to work. Why? They have nothing to fear. They can sleep all making babies because there is no mutongole chief who will come calling.

    Think about the consequences of YKM’s decision to abolish poll tax. His decision cut any incentive for some people to work. Do not take my world for it. Mr Buwembo wrote a column in the Monitor not long ago that he could not find takers when he offered them money to work for him. Think about it. No takers even though he paid okay wages. That is the legacy of YKM’s decision to abolish taxes. Let me be clear, there are Ugandans who want to work but there are no jobs. They would rather work and pay taxes!

    BUT there are also Ugandans who are damn poor due to the perverse incentives created by YKM’s disaster to end poll tax. Yes, when poll tax was still levied, most Ugandans would do whatever it took to pay the poll tax. They would do whatever jobs just to be in good books with the chief.

    That is why taxes matter. They matter because they serve more than just one purpose-in your case consumption. They influence leisure and work activities. That is why the question which taxes to cut is important. Taxes should not be too high to discourage people from working a bit longer. Nor should they be too low to encourage welfare dependency over work-that is why Bill Clinton reformed welfare system.

    With nothing to worry about, most rural and urban folks too in Uganda prefer leisure aka loitering over any gainful activities. So Mr Wafula-Oguttu: What kind of Uganda are you trying to create with your ‘cut taxes’ contract? Let me recommend an important reading for you on taxation:

    Mirrlees, A. James, 1971, An Exploration in the Theory of Optimal Income Taxation, The Review of Economic Studies, Vol. 38 (2) 175-208

    This paper won him the Nobel prize in economics in 1996.


  31. abbey Semuwemba,


    Am not a financial wizard; I’ll be the first to admit that, but cutting taxes can increase government revenue. Tax increases, on the other hand, slows economic growth. If you, for example, decide to drop your MTN subscription, MTN is losing revenue because of the tax increase. For every X number of people that do that, they lay off a worker, that worker goes on the dole at lower compensation, his or her family cuts back on their spending to match their new level of income, etc, etc, and so forth. The effects of the tax increase ripple through the system thusly. You’ve removed money used for commercial activity and given it to the government, where only a small percentage of it will be used for commercial activity. Now, if you realize that higher taxes inhibit economic growth, then you’ll understand why higher taxes can reduce government revenue.

    You ask:’’…… Do you really believe that people in Uganda who cannot afford to buy a kilo of sugar will finally be able to afford one once you cuts taxes?’’

    You probably think it would be a good idea to employ at least the minimum protocol used in medical surgery,i.e, assure that the surgical patient is as stable as possible before surgery begins, and assure that the surgeon has a clear knowledge of what will result from any cuts that are made.

    You have probably got a point here but sometimes a surgeon can start operating a patient in the theatre when the patient is not yet stable particularly in cases of emergency. You cannot tell a surgeon in Mulago hospital not to start cutting your girlfriend who has been shot in the stomach down the streets of Wandegeya just because she is not yet stable. Similarly, Uganda is in emergency and therefore somebody needs to get a knife and start cutting down taxes and expenditures.

    You write:’ Cutting taxes to reduce the size of government would men no money to buy medicine; no money to pay teachers better and above all no money to fund your social services?’’

    Cutting taxes and balancing the budget are not mutually exclusive. It is useless to cut taxes and leave yourself with a big expenditure. In any case, most of the taxes collected in Uganda at the moment are not used to buy medicine for the people but end up in personal accounts, as we all know. This government collects more taxes than any government Uganda has ever had but what have they done with our taxes? If China or Japan or USA or Iran does not donate something, nothing is done without their help. The Observer has already reported that atleast shs.300m of tax payers money is spent on the president alone daily.So which medicine are you talking about?

    The point is that people in the upper income bracket pay the most in taxes, so it makes sense that they receive the greatest benefit. Those that are “rich” pay a disproportionate share of the tax burden. They did before Museveni came to power and they still do, and they will do so even if FDC takes over. And that doesn’t consider the other government benefits that the poor receive that further reduce their net tax burden.

    By the way, like I told Mr.Otto, I’m for higher taxes for the rich becauseto make the rich create jobs, you must “give them incentives to invest”. That means take their liquid money away and force them to work to get it back.

    Overall, It is a good thing whenever someone’s tax is lowered. You should applaud it. You should condemn any tax increase.

    You write:’ now look at the campaign in the UK, yah, Mr. Semuwemba wants the Conservatives to win because it would be good for FDC. So why are they not winning the UK election at the moment?’’

    I’m on the record here telling either you or Billie Kademeri that I don’t want Conservatives in the UK to win despite their friendship with FDC. In fact, I have already voted for labour since am a postal voter. I also remember telling you that Cameron David is gonna be our next PM come the end of May because British people just want a change. I watched the last debate the candidates had on TV and Gordon Brown was the best but the polls done afterwards kept him the last.

    Yes, we gonna end up with a hung parliament but you must remember that we are living in difficult times in the UK. So every party is taking advantage of the situation. The fact is that whichever party wins, they will be forced to get the knife out and cut on public expenditure. The Dailymail has already reported that Labour plans to cut down on the number of nurses and doctors if they win.

    Bottom line is that Gordon is a Scot and that makes him unpopular among the English. It’s not about raising or lowering taxes anymore. People just want Labour out and they will exactly get that. Even the less known liberal Democrats are now getting some support. Both the national socialist party (aka respect headed by Galloway) and the British nazi party (aka BNP) are making gains- both now have geographically concentrated areas of support that could lead to a seat or two in national elections

    Byebyo mukwano


  32. WB Kyijomanyi,

    Mr. Semuwemba:

    That is the argument made by supply side economists, but in reality it does not work out. Actually, MTN or airtime in Uganda should be taxed higher because most Ugandans have no other alternative. Granted, some Ugandans have land lines-they should be taxed lower-and therefore can afford to do without the cell phone, but not phone services.

    So ideally in Uganda, the government should be taxing land line users at lower rates to encourage penetration and allow Ugandans to do certain activities-this is another debate for another day.

    You are actually making the textbook case that you can arise more revenue of you charge less. But that is a special case of elastic demand. That is if there alternatives or substitutes. For example, meat vs. fish. Air time has no such luck. That is why it is heavily taxed because what else will most Ugandans turn too?

    Does sugar have any alternatives? Granted some people no longer use sugar in their tea or coffee. In that case, the ideal/efficient thing would be to tax sugar more not less as Mr. Wafula-Oguttu is suggesting. The same applies to salt because it has an inelastic demand curve-how much salt can one use irrespective of the cost? Again, people may turn to traditional alternatives, but for how long?

    Show me one country that cut taxes and balanced the budget without cutting expenditure/services. There is no free lunch. The Republicans prefer tax cuts for ideological reasons: they want to starve the government of money so it cannot spend on social services for the poor/needy, while spending a lot more on defense.

    What I take from this debate with Mr. Wafula Oguttu and yourself is that FDC is actually a conservative party ideology wise. Whether it is big ‘C’ or small ‘c’ remains to be seen. I am centrist and have no time for right wing or left wing parties.

    The UK election is interesting. I have read that the Liberals democrats are taking votes away from the Tories in certain parts of England. That is a good thing. I have also read that the electoral system a favour Labour-not sure how.

    Well, the Tories are sweating it because of their obsession with tax cuts. The voters know that tax cuts will translate into big cuts elsewhere and they are going to vote with that in mind. They will vote for their stomachs and families first over UK. This time it is what is good for them, not necessarily what is good for UK.

    Let us wait and see but pressure is on Mr. Cameron who is losing the election, even as he has the support of the British tabloid press.


  33. WB Kyijomanyi,

    Mr. Nsubuga:

    We are actually helping FDC get their act together. The Budget is the most important policy document. From the little we have heard from Mr. Wafula-Oguttu, we have an idea what FDC would do and we are saying that it would be a disaster. You and other FDC economists should help them to think through their ideas. They should at least make sense. So far they do not make sense.

    I agree that it is extremely important to connect with the peasant and I believe we can connect with them. We have said enough about FDC’s taxation voodoo economics and it us up to you and FDC folks to listen or ignore our constructive criticism. We offered you a lot of insights for bure. So do not be like the proverbial punda.

    We have asked legitimate questions to Mr. Wafula-Oguttu: which taxes would FDC cut? Where would FDC then get the funds to implement its rosy policies and so on? We did not get any answer.

    People have offered FDC good ideas. Mr. Mulindwa told them to go for the easy taxes as is the norm elsewhere. Others have suggested broadening the tax base by considering what is taboo to the elite today: let municipalities levy a market assessed property tax.

    Will FDC sign a contract promising top do that? Will FDC promise the voters that it would not discriminate between labour and other forms of income for taxation purposes? Today maama mboga is harassed while the lucky few who scooped up former state enterprises-I hear many in FDC too were lucky and were even in charge of the rip offs- now get great returns from their under priced shares. I understand for some the value of their luck/loot is now 100 times higher! But guess what? They pay zip, nada, nil, zero, capital gains?

    So will FDC level with Ugandan voters on this income discrimination? Why should maama mboga who works so hard and managed to build 5 roomed houses in Kalwere/Kiswa/Kisenyi to rent to the folks who work so hard in Balikuddembe/Owino be harassed to reveal her income, while the FDC fat cat who scooped up the former UCB and other govt assets are exempt from any form of taxation? Talk of connecting with the peasants. Do you know how I would campaign before the masses?

    I would escalate the class war. Yap . I even have the line to crack up the peasants ready. I would make the Sudhir, Basajabalaba , Col Mugenyi’s and other crooks who evade taxes the centre piece of my talk. You bet at every rally the peasants would get the message clearly.

    Listen, if FDC is serious, we have offered you enough good ideas. You can continue talking tax cuts or tell peasants straight up. What do you think is easier to understand empty tax cuts or straight up exemptions? Have the courage to tell voters that we shall exempt the following items from VAT: locally manufactured sugar, salt, locally produced tea/coffee, locally produced milk, Nytil/ATM made clothing; school uniform for UPE/USE kids (I know you do not like this program), Vaseline for women so they can have akasusu; other feminine products for women, and yap, condoms.

    Do you think the peasants would not get it loud and clear? Make them excited more by promising to levy modest capital gains on what the elite crooks and NRM fat cats reap from their connections? Here I am telling you how the foregone revenue would be replaced. And you still think we have trouble connecting with the peasant. No sir.

    Now look at a man with convictions and what he has done in Malawi . President Bingu wa Mutharika has transformed that country’s agriculture sector. He did not talk tax nonsense but told voters that if elected he would offer them subsidized dudumaki/insecticide, seeds, tractors etc. And he did. Today go to Malawi and see how popular he is. The peasants are very happy; they have enough food to eat and a lot more to sell. Stop the gimmicks please.


  34. john Nsubuga,

    Mr Kyijomanyi,

    First of all, to lecture taxes to somebody, they must be willing listeners, contributors or potential tax contributors. But we have a problem. In essence, you want FDC to explain its complex tax policies to people who have no idea what these things mean. The peasants. Or…you, desire explanation for your own consumption, in return for your beautifully dressed, but untenable tax contributions here on UAH. FDC has designed a tax system/policy that works for the people, and not what works for your host countries all over the world.

    My argument is that, peasants pay very little, if any taxes at all, making it irrelevant to explain things they will not understand to them. You remember even when poll tax or was it graduated tax was still in place, people used to be chassed, captured, and forced to pay it. They never understood why they had to pay this tax….a simple tax by the way. Of course this shouldn’t be the case, every citizen should be conversant with taxes. They should pay taxes willingly.

    Taxes propel nations forward, so how can 90% of Ugandans be by-standers? I will tell you. The NRM government has put in place an institutionalised policy of keeping the majority of Ugandans/peasants uninformed. That way, you can rule the dwanzies with no interruption, what do they know? If they are denying this, let them tell us why high ranking government officials do not send their children to bona basome schools. But, you hear them go around making profound lies that, these schools are fantastic.

    But they go further. For them, when there’s a single thief, it’s robbery. When there are a thousand thieves, its taxation, which taxes they end up stealing anyway. Look at how state coffers are being drained of money by these people, and not a single person is being held accountable. The president defends them as historicals. Historicals do no steal, but take what is rightly theirs. Then government circumvents official procurement guidelines to contract an unknown company, Kenlloyd Logistics, to replenish Uganda’s fuel reserves, but Ugandans are not supposed to ask.

    I guess these are the wealthy people you’re talking about WBK. The same stingy group who resent getting taxed, yet enjoy the benefits from the government that helped make them rich. Problem is, the NRM government was never designed to make you rich, but rathr its self. You have to find out how, or die trying. You only have to look at how the Mbabazis, Bukenyas, etc. treat PAC committees investigating them with impunity. FDC is saying, close these loopholes, and arrest those thieves still at large. Once arrested, deal with them firmly.

    In conclusion, the reason why I do not subscribe to the notion that FDC should explain its tax policies at length here on the forum is because, there is no point, a waste of time really. You the elite on UAH matter only to a certain extent, but the real power lie with the peasants. Those are the people FDC is indebted to, and should explain how more money will bounce back to them. I have followed this tax debate with keen interest, but it is as tantalizing as it is the easiest impossibility to understand some of our friends.

    They simply pull tax policies of their host countries in Europe, America, etc. into this debate as if they are compatible. They can’t work here. We must weave our own, tax policies capable of going through the hole of the needle.


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