Government’s proposal to increase the rate of Stamp Duty to two percent has been rejected by Parliament.
Stamp Duty is a percentage of the total value levied on exchange or transfer of property.
While considering the Stamp Duty (Amendment) Bill, 2016, legislators objected to the increase in the rate from one percent saying it will lead to corruption and tax evasion.
Members of Parliament deferred the proposals of government at a sitting of Parliament on Thursday, 07th April 2016.
The Vice Chairperson of the Committee on Finance, Planning and Economic Development, Hon. Anthony Okello while presenting the report said that the committee’s proposal was to increase to 1.5% having noted that the two percent was high.
Hon. Wilfred Niwagaba (Ndorwa East) said that the increase in the duty will be prohibitive leading to fraud and corruption.
“Both proposals by the government and the committee are too high. This will lead to people under declaring and bribery to avoid paying,” he said.
Hon. Paul Mwiru (Jinja Municipality East) advised the government to seek alternative revenue sources and leave the property transfer fees at one percent.
“Look at alternative ways of increasing the tax base. The revenue will actually fall as more people will avoid paying the duty,” he added.
Lwemiyaga County MP, Hon. Theodore Ssekikubo said that with the duty at two percent, there will be an increase in cases of bribery between the tax collector and the payee.
“This will tempt the two parties to exchange money and undervalue the properties. This is a clear case of evading the duty,” Ssekikubo said.
He added that this move will undermine efforts of government trying to monetise the economy by raising the Stamp Duty.
Finance State Minister, Hon. Fred Omach argued that the measure is aimed at increasing revenue which government has already projected in its fiscal plans.
“With the rate at two percent, we anticipated to collect Ushs9 billion. However, if we go with the committee proposal, we shall still be able to collect Ushs6 billion,” he said.
The Speaker, Rt.Hon. Rebecca Kadaga advised the Minister, the committee and Members of Parliament to consult further on the proposals and report back to the House.