Taxes are a core source of revenue for the government to fund the provision of public services and the day-to-day running of the nation.
However, taxes become fundamentally flawed and retrogressive whenever they hinder access to essential commodities necessary for the realization of basic human rights, especially for the most vulnerable members of the community such as infants and the elderly.
The 2023/24 national budget passed by parliament and read by the minister of Finance on June 15 contained a resource envelope of Shs 52.7 trillion, of which Shs 27.4 trillion is supposed to be collected from taxes.
Therefore, the Uganda Revenue Authority (URA) through the ministry of Finance proposed a number of tax amendments presented in the Tax Amendment bills on Exercise duty, Import duty, Income tax, and Value-added tax for the primary purpose of increasing tax collection.
The tax regime on diapers this financial year is perhaps one of the major highlights of the 2023/24 budget and a clear example of retrogressive taxation; a system where the burden falls more heavily on those that are least able to pay.
The increase in the import duty and the value-added tax (VAT) on diapers are an impediment to the realization of the right to health for children and the elderly but also demonstrate the gap that exists in the national legislature for the protection of the interest of the public during the budget formulation process.
For the 2023/24 financial year, the government has adopted a 10 per cent increase in the import duty on baby diapers from 25 per cent to 35 per cent. According to the Uganda Revenue Authority (URA), this is intended to protect local industries.
Secondly, parliament voted against the exclusion of adult diapers from the 18 per cent Value Added Tax imposed on locally-manufactured products. Adult diapers had been specifically recommended for exclusion from that tax by the ministry of Finance because they had been categorized, rightly so, as health products.
Some members of the parliament like Agnes Kirabo (Youth MP Central Region), however, argued against the exclusion on the basis that adult diapers may be used by homosexuals.
Aside from this being a gross stereotype against sexual minorities, it is not sufficient reason to impede Ugandans of advanced age or those with medical conditions such as fistula from accessing these medical supplies, which are necessary for their palliative care.
The argument for the 18 per cent import duty on diapers generally is equally flawed and retrogressive. URA’s justification for this tax is to promote local diaper manufacturers. However, this reasoning overlooks some crucial factors.
Currently, there are only eight local manufacturers, and they account for a mere 40 per cent of the diapers available in the market. In contrast, established importers like Pamper Diapers and Huggies are responsible for supplying a significant portion of the diapers currently on the market.
As a result, this tax will inevitably increase the price of diapers before it can benefit local manufacturers. Consequently, the burden will fall ultimately on the consumers.
These two tax policies add to the list of retrogressive taxes adopted in Uganda against essential items that are intended to make the lives of Ugandans better. Even yet, the debate in parliament, which is supposed to protect the public interest, remains counter-productive and politicized, avoiding the true issues that affect the citizens and only advancing political agendas.
A young mother is going to have to pay more for diapers because the price of such an essential item is bound to increase with the increase in taxation.
All this will happen because legislators refused to understand the market dynamics of diapers and chose to stop an exemption on diaper taxes because of a homophobic position, instead of advocating for a general exemption on diapers, which would increase accessibility for such essential commodities.
The author is a law student at Makerere University.
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