President Yoweri Museveni has returned the Income Tax Amendment Bill to Parliament for consideration.
The bill passed by parliament last month seeks to members from paying taxes on their incomes.
Chris Obore, the Parliament director for communication and public Affairs, says the president returned the bill to Parliament on Monday.
“I am informed that the action by Parliament was prompted by the Court ruling,” Museveni is quoted by the presidential press secretary Lindah Nabusayi as saying.
He said in the matter of Francis Byamugisha vs Attorney General, Parliamentary Commission & URA HCCS No 745 of 201.3, resolved that all emoluments paid to MPs are subject to tax under the provisions of the Income Tax Act Cap 340.
Museveni said the decision taken by Parliament does not promote good practice because it risks to undermine the integrity of both the Courts and Parliament.
“The decision by Parliament has provoked public outrage and projected Government in bad light,” he observed.
Museveni says MPs are not being sensitive to priorities of the country and general economic condition of the citizenry.
“As principle, salaries for all employees were consolidated to minimise abuse which was rampant through disguise of salaries in form of allowances.”
The president said the decision by Parliament to grant themselves a tax exemption status is therefore, not only injurious to our revenue effort but also not politically and morally correct.
Museveni also pointed out that small income earners like teachers, nurses and other public employees cannot be expected to pay income tax on their consolidated meagre salaries.
He said Members of Parliament who earn considerably cannot be exempted.
“What moral authority can Parliament or Government have to encourage the public to comply with their tax obligations?” he wondered.
He added: “When Members of Parliament have granted themselves a special status, this would tantamount to applying double standards.”
The bill had attracted criticism from the public and civil society.
Parliament even petitioned the Court of Appeal over the Commercial Court ruling that ordered the Parliamentary Commission to deduct Shs9m in monthly Pay as You Earn Taxes (PAYE) from MPs salaries.
Each MP is expected to pay Shs9m monthly as income tax from his/her salary.
Should they dodge, the country loses Shs3.8bn monthly in tax revenue.
Religious leaders last week wrote to Museveni asking him not to assent to the Bill.
Earlier Mukono Municipality MP Betty Nambooze had tried to recall the Bill to remove the exemption.