KACITA’s leadership is accused of being dishonest by the government.

The Ministry of Finance, Planning and Economic Development and the Uganda Revenue Authority are accusing the traders’ leadership of dishonesty as the government prepares to meet with them about an expected strike by importers of textile and textile goods over taxes.

KACITA, the Kampala City Traders Association, has urged its members to stay at home on September 1 unless the government answers to their requests.

Since the government waived several taxes earlier this month, the URA claims that importers of textile and apparel products have boosted their tax compliance levels.

According to the report, there are now 125 containers awaiting approval, not the 700 that Kampala City Traders Association, KACITA, told the media over the weekend.

Nine containers have been cleared as a result of the waiver earlier this month of the 3 and 3.5 dollar per kilogram tariffs on textile and apparel imports that can’t be made domestically.

“We have 125 containers in our control, and 9 have been cleared as a result of the new tax system announced by the Minister of Finance, Planning and Economic Development,” says URA spokesman Ian Rumanyika, adding that KACITA’s assertions are false.

This comes as the Finance Minister is scheduled to meet with dealers this week to discuss the situation.

“Traders will meet with Finance Minister Matia Kasaija this week to discuss their appeal against the textile and garment tax regime. Imported clothing are taxed at 35% or 3.5 per kilogram, whichever is greater, while textile fabrics are taxed at 35% or 3.0 per kilogram, whichever is higher, according to Apollo Munghinda, the ministry’s Principal Communications Officer.

If the Ministry does not meet the demands for a reassessment of the taxes by September 1, the Kampala City Traders Association is set to go on strike.

The new tax policy on imported clothing and textile products, according to the dealers, has resulted in a tax burden that is more than doubled. According to KACITA, a 20-foot container cleared at Shs80-100m is now cleared for Shs280-300m.

URA, on the other hand, contradicted this, claiming that the per-kilogram duty affects only 10% of all garment and textile imports. “The current textile tax regime is informed by the fact that Uganda continues to import large quantities of finished textiles and related products worth about 231 million dollars, resulting in an outflow of foreign exchange and the donation of jobs to foreign textile industries,” according to the ministry.

The traders have also been accused of deception by pretending that tax rates are going up this year. “Since the tax rate on textiles was set at 35% for the Financial Year 2020/2021, the status quo was preserved. As more traders learn that the rate has remained unchanged from the previous financial year, this amount is projected to rise,” Rumanyika adds.

Traders who support the strike claim that the new tax structure is forcing them to close their doors. According to the Uganda Revenue Authority, URA, these textiles account for 90% of all clearances by textile and garments traders.

“However, the textiles and garments that can be sourced locally from Ugandan manufacturers, which account for 10% of the imports by traders, shall be maintained at a rate of 35% or 3 dollars per kilogram for textiles and 35% or 3.5 dollars per kilogram for garments, as approved by the council of Ministers under the East African Community Gazette Legal Notice No. EAC/118, as approved by the council of Ministers.

Rumanyika said that talks between the government and the traders are still ongoing and that they are considering restoring the policy. “The Ugandan government is continuing to engage the leadership of KACITA and all other merchants’ organisations to create a shared appreciation of this position and the collective benefits that come with it,” he says.