“Why shouldn’t I, as a SACCO member, pay tax on my interest earnings, yet people saving in other financial institutions pay tax? What is the problem with me paying taxes on dividends that I earn through a SACCO?” Musasizi asked.
Musasizi said that SACCOs just like other financial institutions operate in the same environment. “SACCOs just like banks make profits on all their investments; why should they be exempted?” he asked.
Hon. James Kakooza (Kabula County) added that Parliament cannot develop a law that is discriminative and biased. “The law targets institutions that offer financial services which include SACCOs so they are expected to pay taxes,” he said.
Furthermore, Hon. Francis Mukula (Agule County) said that many of the SACCOs suffer from issues of poor management, gross abuse of funds and poor record keeping and therefore even if taxes are waived, the SACCOs will not progress.
“The major focus of these SACCOs should be to streamline their management and operations in order to be efficient and realise better returns,” Mukula said.
However, Methods Mureebe from the Parliamentary SACCO said that the tax waiver would be beneficial to SACCOs whose motive is to build communities, unlike banks whose motive is to make profits.
“These SACCOs are owned by the communities they serve and they offer financial services at much friendlier rates to the people in villages who cannot access the expensive financial services of corporate banks,” Mureebe said.
Stephen Bongonzya from the Uganda Cooperative Alliance also argued that the interest earned by members in most of the SACCOs is too small to be taxed.
“Our members are mainly located in the rural areas which makes it difficult for them to understand why they have to pay taxes yet they are poor. Most people would rather keep their savings in a rudimentary way without them being taxed,” Bongonzya added.
The Committee resolved that the SACCOs develop better ways of operation, and stronger reasons for them to be exempted from paying taxes.