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UGANDA: History of taxation – introduced to fund WWII

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Collecting taxes. A colonial officer inspects cotton at a ginnery in the 1950s. FILE PHOTOS
In Summary

KAMPALA (DAILY MONITOR) – Taxation. It is 57 years since income tax was introduced for indigenous Ugandans.
The tax dreaded by many employees came as a directive from the colonial governor at the time.

This week Ugandans witnessed violent scenes in Yumbe District that erupted after a confrontation between an angry mob and UPDF soldiers attached to the tax collection body, Uganda Revenue Authority.
The incident started on Wednesday morning when the mob engaged the URA enforcement officers after a boda boda rider died as he was hit by a door of the URA car in the process of impounding his motorcycle.
URA would later come out to blame political leaders in the district for the incident. This is not the first time residents, politicians and the State engage each other over collection of taxes.Introduction of taxes
It is 57 years since income tax was introduced for indigenous Ugandans. The tax dreaded by many employees came as a directive from the colonial governor at the time.
In the 1940s, payment of income tax was a preserve of non-Africans only; meaning only Whites and Asians would pay. It was introduced as an emergency measure during World War II to raise money to fund Britain’s participation in the war. Indigenous Africans were exempted from paying income tax despite being employed formally, but they would pay export tax for their coffee and cotton.

The income tax for Ugandans was introduced in November 1961, but would take effect the following year. The law, however, faced implementation challenges as there were questions on how the numbers of the potential taxpayers would be determined.

East African regional commissioner RG Garner was one of the officials to raise the concern. According to the Uganda Argus newspaper of January 20, 1962, Garner said: “I have been trying to work this out, but it’s very difficult. There are no figures for us to work on. We can get hold of government servants and other employees and probably most African companies but after that it is different.”

During introduction of taxes in the 1940s, Ugandans were required to pay taxes for their cotton and coffee exports.

No public sensitisation about the tax was done yet in a few months people were supposed to start paying. To many, it was a shock, which was also confirmed by the commissioner.

“Many of them will get a shock when they get to know how much they will have to pay,” Garner said.
Fortunately, there was a threshold and some exemptions, depending on one’s marital status and income levels.
A single man earning Sh4,500 and below per year was exempted from payment. A single man earning up to Shs10,000 a year was bound to pay up to Shs550 as income tax. The same was also applying to married men without children.

Under the new tax regime, Africans with more than two children earning less than 14,000 a year were to be exempted from the tax.
The announcement was made a month after the Legislative council (LEGCO) passed a law lifting the tax exemption to Africans. The new law required them to pay income from the money earned every year. At the time of introduction, income tax was paid annually. Today it is paid monthly.
Although it was said income tax would be paid by non-Africans only for the purpose of financing the war, the practise continued even after the war ended in 1945. Foreigners who had been paying the tax protested against it, and were later joined by the African counterparts who were asked to pay export tax for their coffee and cotton.

Election issue
Implementation of the new tax laws was supposed to start in 1962, which also happened to be an election year.
Politicians made the new taxes an election issue with leader of opposition in the LEGCO, Milton Obote, calling for a special meeting for the opposition members to come up with a united stand against the announcement.

“The opposition had submitted during the legislative council debate in November that the matter needed study and close examination,” Obote said.
“Africans were not aware that they would be called on to pay tax this year and had no savings to meet this sudden burden. The introduction of the tax was because the central government did not have money, the introduction was aimed at it raising money for government to meet its expenses.”

Buganda Kingdom education minister Abu Kakyama Mayanja also demanded that the governor withdraws his order until questions about the order are sorted out within the Buganda government.
Mayanja, much as he wanted the governor’s order rescinded, was not totally against the tax. The problem he had with it was its timing. The biggest number of Africans in formal employment at the time were Baganda.
In an interview with Luganda newspaper Taifa Empya, Mayanja said while introduction of the income tax to Africans was welcome, it was only fair that the people should be taxed according to their means of their income.

The Buganda minister went on to challenge the mandate of the Legislative Council that passed the law when the country had just concluded an election for the first internal self-government. It should be noted, however, that Buganda was opposed to the creation of an internal self-government and called on its people not to take part in the election.

Clashes. One of the cars which were reportedly set ablaze this week by the protesters in Yumbe Town after they clashed with URA officers. COURTESY PHOTO

“The existing Legislative Council had no moral mandate for Buganda and since most of the people who could be affected would be from Buganda, the matter ought to have been postponed until after the next elections to the National Assembly,” Mayanja said.

His argument was premised on the understanding that once the new elections in which the Buganda Kingdom had agreed to participate in were done, their UPC-KY alliance would be the victor. Buganda with its representatives in the National Assembly, he calculated, would be able to pass laws that were favourable to the kingdom and its subjects.
Chief minister Bendicto Kiwanuka, who was fighting for his political survival ahead of the elections, found himself in muddy waters over the introduction of the tax. To the voters, it was Kiwanuka’s government that was going to collect the tax.

Kiwanuka accused Obote of lying to the electorate. “This is clearly a matter in which we do not take any side at all. I would like to repeat that we are not introducing income tax because we are short of money.”  Kiwanuka explained that the income tax was a consensus of all Ugandans who attended the first London conference.“It was not DP’s resolution to introduce a new tax, but a resolution reached during the London conference. The matter was reached in London in October with Mr Obote present and it was passed without amendment. In the LEGCO deliberations in November was pointed out that this measure had to be implemented before the internal self-government rule when discrimination taxation had to end.”
Kiwanuka’s newly formed DP government went on to lose the elections to the UPC-KY alliance. DP got 24 seats in the National Assembly while the combined total of the alliance was 58 seats.

Published on April 01, 2018 at 10:28PM

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