On 9th Feb 2021 the Treasury Secretary wrote to the Governor Bank of Uganda seeking advise on how they would start taxing bank withdrawals!
If this is approved, every time you go to withdraw money, you will pay a tax.
Uganda has one of the lowest savings levels in the world leading to the low size of credit in banks.
The last BOU reports show that 17% (7,480,000) of the 44M Ugandans have bank accounts. (Remember many of the have zero balance) Of the 7.4M, 2,767,600 are the wealth people.
Young people are 6% (448,800) have bank accounts!!
64% (4,787, 200) say they keep Bank Accounts in order to save this money.
The report showed that 92% Ugandans dont have bank accounts because they dont have sufficient funds. This can be collaborated by the BOU report of 2019 which showed that 40% almost a half of the Uganda population spend a month without holding money.
Taxing withdraws will only severe the saving culture and affect the amount of credit available for banks to lend to potential business persons and investors. This will also lead to increase in interest rates which will in turn lead to increase in the cost of capital and doing business. In the long run, the economy will be faced with hyper inflation.
If government wants to manage its Bill, it should reduce on the cost of public administration. E.g. before nomination, government introduced 54 more constituencies.
We all know the cost of one MP, a 200M car, monthly pay on average 25M which is 300M per year and 1.5bn at the end of the 5yr term. The 54 will take 10.8bn for cars allowance and 81bn for salary at the end of the 5yrs. Remember this is sitting allowances.
EC increased the number of councillors in the city to about 500 all must be facilitated. This was done allover the country with 147 district chairs, DISO, CAOs, over 10,000 councillors and sub county chairs in thousands.
Reducing public admin expenditure will avail more funds to spend on the development expenditure/projects and reduce pressure on the tax payers.
This TAX must be stop coz it’s a double tax. One pays PAYEE on their salary, their is an already available tax on ATM withdraws. After withdraw one pays taxes on every item they go to purchase.
This tax will make people run to pick their money from the banks and keep it home.
Mr. Government, the tax burden is too high on our people yet many of us don’t feel government at home.
Written By Harold Kaija