Paschal B. Bagonza
June 29, 2013
With the proposed reintroduction of Value Added Tax on water by Uganda’s Minister of finance, Maria Kiwanuka, some taps might stop running and people might resort to alternative sources like wells and streams. These alternative sources are not a guarantee of safe water.
There are also fears that underhand methods may be used by consumers to access water connection and or while paying bills.
Kiwanuka reintroduced 18 per cent VAT on water for domestic consumption and government projects to collect Shs 8 billion in revenue to fund the UGX 13.1 trillion national budget of 2013-2014.
While presenting the budget in Kampala the minister said: “I propose to apply VAT on the supply of water to improve tax administration and generate revenues. This measure will raise Shs.8 billion. This should not affect the prices paid by the majority of low-income consumers, as the price of a [20-litre] jerrycan from National Water and Sewerage Corporation (NWSC) will amount to about Shs.40 at communal taps.”
The tax proposal has like previously, sent tongues wagging across the board.
Majority members of the public are crying foul:
“My name is Joseph Ssemakula from Kabusu. This budget is unfair to us, especially regarding water. Water helps everyone. Government isn’t right in taxing water. This should be done on other items. Unless they want us, youth to smell, because we will not be able to afford paying for water to bathe.”
This lady involved in selling boiled water for drinking in Kampala said: “We couldn’t afford water at first. Previously, the water cost was hiked. The 20-litre jerrycan cost between Shs 500- 700. How much are we going to pay now? We are living in poverty and now they want to increase the cost of water. Some of us use water as typical business. Imagine, if I buy water a 20-Litre jerrycan at Shs 700, use charcoal to boil the water, buy packaging material and straws. Will I make any profits?”
“I think they should have increased taxes on other items like cigarettes and alcohol, but they shouldn’t do that to water. First of all there are no wells. We appeal to the government to look into this. All the wells dried up. The government should help and construct for us water wells with pipes,” this gentleman from the neighbouring district of Kampala said.
According to Water Aid, 33% of Uganda’s population does not have access to safe water, and 52% of people are without sanitation. Infant mortality stands at 130 in 1,000, and 26,000 children under the age of five die every year from diarrheal diseases.
The reintroduction of VAT on water, like oxygen, the lifeline of human beings, will have many far-reaching consequences.
Writing in the Daily Monitor newspaper, Eng. Simon J. Mone is worried that for many communities in drier areas of Uganda, the cost of access to water for domestic use is going to increase…the water problem Ugandans in different parts of the country are facing have very serious impact on the people.
Eng. Mone is of the view that “the government could have considered alternatives to cover the tax on water in the proposed Budget.”
Anti-corruption activists are worried that this may increase graft in the water sector as the public find ways of accessing cheap piped water. The increment is more likely to arm twist water users to participate in corruption in a bid to lower the cost they pay for water.
Peter Wandera, the Executive Director of Transparency International –Uganda says the urban poor will mostly be affected by the increment. A rise in cases of backhand methods, Wandera says, is more likely to be experienced to access water.
“Definitely because now, it will also be giving chance to whoever is responsible at that level to connect the water. If you want water at cheaper rate, just give me some little money, I will connect you. This used to happen previously. Getting water to one’s premises used to be a whole process. One had to bribe here, bribe here, here. But of recent it had sort of reduced or eliminated. But now with this increase, most likely we are going to see a rise in such cases,” Wandera observes.
The Executive Director of Anticorruption Coalition Uganda, Cissy Kagaba also predicts increased cases of corruption in the water sector.
Kagaba says: “The fact that the prices of water will go high which means issues to do with connection will go high. And we know that when it comes to connection fee, reconnection fee and paying the bills, that is where we see quite a number of increase of levels in corruption. Definitely, yes the levels of corruption will go high when it comes to especially issues of accessibility, connection and reconnection, and all those things.”
Kagaba adds that increment will have a spillover effect in education, health and agriculture among others. In, a way, she adds, the increment might affect the attainment of the MDGs.
It is generally agreed that health is going to be affected, when it especially comes to water borne diseases.
Like electricity being expensive and riddled with cases of power theft, it is more likely to be the same with water. The parliamentary liaison officer at the National Catholic Commission for Justice and Peace, Uganda Catholic Secretariat Fredrick Ssemwanga observes that the government might incur more expenses in enforcing the law.
Corruption, Ssemwanga predicts, is more likely to be pronounced in the water sector this time.
“It is from electricity being very expensive that you find more culprits trying to by-pass electricity. This is going to happen in water; that government is most likely to incur more costs to address such challenges. We are seeing Umeme incurring more costs in enforcing and getting those culprits. We are going to see corruption from the officials themselves,” Ssemwanga observes.
Since the majority of rural population has no access to clean and safe water, this tax, according to Uganda People’s Congress spokesperson Okello Lucima will create racketeering and graft.
He says the taxation will just in other government departments, water will be no different. A network of the corrupt and speculative people to exploit the water delivery system.
Much as the national water and sewerage Corporation is the sole piped water provider, there are fears that any increase in the water cost will more likely create a foundation in Uganda to breed water cartels by well connected people.
“I wouldn’t be surprised if it comes up because corruption, it goes on advancing. So even in water, we can have those cartels being created eventually,” Wandera observes.
However, Kagaba says the sole water provider will ensure that no one else supplies water, thereby killing off any cartel rearing its head. The monopoly, she adds, helps NWSC consolidate its tax collection ability.
“I don’t really think the cartels may come up because right now National Water is the monopoly. If the cartels come up in the purpose for which the government put this tax will not be achieved because people will divert to these cartels.
Ssemwanga observes that water cartels are most likely to emerge if the sector is liberalised.
When this proposal came in the budget last year, the speaker of parliament Rebecca Kadaga said Parliament was going to fight the reintroduction of VAT on piped water; and indeed it was.
Kadaga said the previous parliament had then rejected this proposal and wondered as to why the government had reintroduced it.
The chairperson of the parliamentary forum on water, sanitation and hygiene Jacqueline Amongin says the forum will again lobby other MPs, like last year to have this proposal dropped.
Amongin is worried that the introduction will drive the population to use unsafe water thereby exposing themselves to water-borne diseases.
“Last year the Forum worked hard to have this 18% removed and water was zero-rated. But now they have reinstated it. So now we have to put back the points we raised last year,” she says.
She says illegal connections are more likely to increase if the tax is implemented.
National Water and Sewerage Corporation spokesperson Vivien Newumbe says before VAT was removed, consumers were paying their bills without any problem. She doesn’t see any problem cropping up because of the reintroduction of the tax.
Newumbe says “We don’t think this is going to affect us [NSWC] in any way like saying that we are going to have massive illegal connections or corruption and things like that.”