After researching this subject matter for a few weeks, I came to the conclusion that it is economically feasible and productive to cancel all taxes on workers salaries.
With salaries generally taxed at around 30% percent today, if the cancellation is effected, millions of workers will have a huge boost to their purchasing power, and therefore more money to improve their standard of living. By consequence, more businesses will realize more sales and be healthier/grow. Currently, a person who for example has a salary of 500,000 Shillings, actually gets only 350,000 Shillings. Because of the average 30% tax on their salary, 150,000 Shillings is taken away from them. We should give them back their 150,000 Shillings every month. It will stimulate the economy, and it is alot of money for the people. Other workers who prefer saving, will have extra money to do so possibly for a big investment later. More cash will also then be available in banks, which in turn can then be given as loans to serious investors who have good collateral/security for the loans. This would be another bonus for the economy since any new investment means more jobs, greater economic growth, and also income for state coffers through sales tax revenue and VAT. Government will gain exponentially more than the revenue initially lost from cancelling salaries taxes. Existing businesses and the new projects that both individuals and entrepreneurs will be able to initiate, would all be doing better as long as the market accepts their products and services. It would be a saner tax regime for Uganda's development, one for the people's improved well being. Taxing salaries is like taxing production and hindering consumption. Yet cancelling taxes on salaries is smarter than a bailout for the rich and their big companies. Why waste funds to maintain production yet the problem of business failure is that their is no consumption of their products or service. Cancelling taxes on salaries is like a big salary raise offered by government to all workers in Uganda so as to initiate that required consumption on a macro-economic scale. Income tax on individuals salaries was initially an emergency British system that was invented around 1799 for war purposes. It definitely was not designed to foster economic development but rather to quickly get more money to produce and buy weapons as Britain frantically prepared for the looming war against Napoleon. It is therefore a taxation system that is outdated in both time and purpose. A burden to the people, and a net reduction of consumption. It is like a forgotten handbreak lever that is still pulled up, slowing economic growth and we haven't realized it yet as we drive on. So Ugandans! Please think seriously about this. It could quickly boost economic development in a way that is immediately tangible to Ugandans' pockets and the businesses that they consume products from. The problem is that there are some Ugandan leaders whom it seems are praying and planning for themselves and not really for the country's genuine long term prosperity. There is seemingly also a dangerous minority who are praying for the day chaos starts in Uganda with death, destruction, and total anarchy. For such people, nothing constructive ever counts and it is only when anarchy happens that they will start feeling happy and have that other stupid smile stuck on their jaws. Why? Maybe I'll have to get elected president and implement such progressive policies myself. By Hussein Lumumba Amin. 17/07/2016
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