Mr Daniel K. Kalinaki
Finance Minister Matia Kasaija, who owes us a collective national apology for an imaginary plane that whistled off into the skies never to be seen again, will this afternoon subject us to yet another Budget Day speech.
The budgeting process has become a lot more transparent but, apparently, no less prone to meddling and influence peddling of allocations. Much of what will be spent is already known but what we will know in a few hours is which pockets Mr Kasaija will pick from as he seeks to cover a record spending plan and a massive fiscal deficit.
Thus this is a good time to check in and see the raw deal that our tax regime serves up, particularly to salaried employees. Warning: if your mental health reserves are low you might want to skip this one; I promise to serve up something lighter and warmer next week. If you are staying, you might want to sit down.
First, the taxation policy does not have enough levels to be sufficiently equitable. Let’s say you earn Shs1m a month; your effective Pay As You Earn (PAYE) tax rate will be around 20 percent. Your colleague who earns double or Shs2m per month pays more in tax but at 25 percent, they get to keep more of their cash than you.
If it makes you feel any better, you are not alone. Someone earning Shs4m pays 27.5 percent in income tax, compared to 28.7 percent for one earning double, Shs8m. It goes on until the Shs10m mark when income above that mark attracts a rate of 40 percent but I am not sure it solves the equity problem given that ours is a low-wage economy.
Before you slash your better-paid colleague’s car tyres, the bigger story lies elsewhere. Say you are the big kahuna making Shs8m. Every month you pay Shs2.3m in income tax, leaving you with Shs5.2m after mandatory NSSF contributions. This should be decent enough to live on, right? Well, not so fast!
In the absence of safe, predictable and affordable public transport – in fact in the absence of roads if you live in Kampala’s northern suburbs – you definitely need a car. One option is to brave the dust, the boda bodas and the taxis until you have saved enough to buy a 20-year-old Japanese tin on wheels. The other is to take a car loan at around 20 percent, then have it advertised in the newspapers a year later when you fall back on your instalments.
If you are brave enough to borrow from a money lender, you must be prepared to walk out of the office one day and find the car gone due to a missed or delayed loan instalment.
Then you move to the bigger and more substantive issues. There is no affordable housing to speak of; so you will have to save through the nose to buy an overpriced piece of land in some far-flung satellite town if you have any homeownership dreams.
The land is the foundation of your dreams – and more problems. Apart from the house itself whose building will involuntarily strip all fat from your diet, you have to build a wall and electric fence for your security, a septic tank in lieu of a public sewer line, do the road to your house and install streetlights yourself.
As you go about building your Mini People’s Democratic Republic of Kiwenda, life must go on. That means private school for your kids and private hospitals because even the Education and Health ministry officials can’t trust them; who are you to?
Whatever you do, don’t fall for the temptation to wonder what crime you committed to be Ugandan; getting a national ID to prove your Ugandanness costs money! You could consider leaving, but the passport also costs money.
So you sit down in your unfinished house, quietly work through your unpaid loans and wonder where all your tax money goes. The radio in the corner of the room interrupts your thoughts with a news bulletin. Someone has been given half a trillion shillings to build a factory, not too far from where another was given even more to build the most expensive hospital foundation in the world.
You retire to your bed. In your dream, you are walking down a dusty street in Kampala when you are suddenly surrounded by a bunch of young men. They hold you down and empty your pockets. You can’t see their faces, but you recognise one of them; his shirt is made of the Ugandan flag. You wake up with a start; did gava just rob you?
Mr Kalinaki is a journalist and poor man’s freedom fighter.
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@Kalinaki
