Coffee farmers and promoters have asked government to reconsider a 1% value added tax imposed on coffee, as it is affecting farmers mostly.
In the 2018/2019 Budget, government imposed a 1% tax on coffee buyers and coffee processors as a way of encouraging inclusive tax contribution by all Ugandans.
However, the farmers say the tax was passed on to the coffee growers.
The Executive Director Uganda Coffee Development Authority (UCDA), Emmanuel Lyamulemye says the tax is affecting coffee farmers negatively and should be reconsidered if coffee production is going to be developed to another level.
“Coffee farming is one sector that can affect household income generation and improve financial equality and inclusion for all. Families that have a coffee garden cannot be considered poor because of the ready market for coffee. However such bad policies take coffee production back and must be revised,” he said.
Iyamulemye was speaking at the international coffee day celebrations at the Mukono zonal agricultural institute and training center in Mukono.
Dr. Iyamulemye appealed to the Minister of Agriculture, Animal Industry and Fisheries to talk to government to reconsider the tax.
He further asked the Minister to also advocate for a coffee research fund if coffee production is going to be enhanced.
According to him, Research is a very important factor in Agriculture especially coffee production, processing and market yet no special fund has been put in place for this effect.
“Every year, the body puts aside 10% (about Shs 2b) from the coffee export earnings for research. However this is not enough considering how crucial research is. We appeal to the government and other development partners to offer help” he said
In his response, the Minister Ssempijja Vincent who was the guest of honor said he was already in talks with the finance ministry and the office of the Prime Minister to revise the 1% tax on coffee as it is not achieving the intended effects.
“What we wanted was that each person contributes a small percentage to the government treasury through tax so we agreed on the 1% on value addition. What we didn’t anticipate is that the tax will be transfered to farmers. We are going to revise it so that the tax becomes indirect and doesn’t affect only farmers” he said
The minister further added that by end of this year, the special coffee bill would have been passed to help in promotion and marketing of farmers
“It will address marketing strategies, branding Addressing the gender issues and funds for promotion of coffee processing. The aim is to make our coffee globally known and recognized” Minister Ssempijja said
Coffee remains Uganda’s biggest export after tourism. Last year, Uganda exported about 4.5m bags. The country’s target is to export 20m bags by 2025.