You can’t have missed our honourable members machinations to
have taxes on their allowances waived. MPs are hopping to save more than sh5m a
month in taxes with this provision they muscled into the Income Tax bill.
These manoeuvers were necessitated – in our honourable
members’ minds, by a February high court ruling for them to pay taxes on their
allowances like all other workers of Uganda. They somehow weren’t paying since
2004.
"Following a public uproar about their self-serving ways they, last week threatened to hold all of us ransom by refusing to pass the budget if they were not accommodated. Not unlike the toddler throwing its toys out of the play pen in a tantrum...
I am not hopeful that we can stop our honourable members in
their quest for tax free living.
However this kind of attitude does not bode well for the
country’s future.
All around the world, when politics comes up against
economic, politics wins and often to disastrous effect.
Last week Uganda made the decision to pass the oil pipeline
through Tanzania and not through Kenya as was earlier expected, which brings us
one step closer to oil production now, now expected for before 2020.
At peak production Uganda expects to be piping out 200,000
barrels a day. To put this number in perspective using $40 a barrel, our
exports of goods will double from around $3b annually currently.
Of course all
these monies will not find themselves into the national coffers but our share
of the price of a barrel, the taxation of oil companies and the revenues from
supporting industries will amount to a very tidy sum.
"As incredible as it sounds, if our political leadership is not focussed on the long term benefits of this windfall and only see the short term gains they can milk from the situation, we will soon be worse off than when we had no oil...
Hard to believe?
Well, Ghana established commercial viability of their oil
find in 2006 around the same time as we did. Their fields were off the coast so
easier to evacuate the oil. In the excitement and driven by bad politics – an
election was around the corner, the government leveraged future revenues to
raise public service salaries by 50 percent in one fell swoop, in addition to
other jumps in consumption spending.
A populist move that has cost them dearly, because now with
the collapse of oil prices from highs of $140 a barrel in 2007 to around $40
now, Ghana finds itself looking to International Monetary Fund (IMF) for help
in paying for its imports.
Across the pond in Venezuela, during the oil boom, the Latin
American nation initiated many populist social programmes and even had time to
thumb its nose at the US. Since then prices have plummeted and the country
finds itself unable to sustain the programs, with inflation jumping to 500
percent. It has become so bad in fact that last week it was reported that the
government is running out of money to print more money to keep up with
inflation.
It would have been funny if you don’t think about the man in
the street there.
In all these crisis you can bet there were politicians –
like our own honourables, throwing caution to the wind, disregarding basic
economics to plunder the treasury regardless of the plight of the country in
general.
You can bet the representatives in Ghana and Venezuela are
also hatching plans to increase their pay as you read this.
But the winner has to be neighbouring Equatorial Guinea.
This little country has proven that it is not population size but political
management that is key. With a population of about 760,000 they have the
highest GDP per capita on the continent of about $20,000, however its
populations is among the poorest on the continent with more than three in
four living on less than a dollar a day.
President Teodoro Obiang, his family and cronies have
squirrelled away hundreds of millions of dollars in western banks (maybe why he
is the longest serving president on the continent) and squandered it on high
living. But you can bet there are politicians in the country who have been
co-opted into the racket in total disregard of the people.
"Politicians all over the world are the same, they will always be on the lookout for personal gain, their baser instincts tempered only to the extent that strong institutions, societal censure or basic good manners prevails...
The correct thing to do is to invest these windfalls so the
returns from the investment can pay for improvements in the wellbeing of the
people.
Investments in social services, which improve the quality of
the human capital, or building infrastructure, which reduces the cost of doing
business are better than raising MPs salaries, which is not an investment but a
price we have to bear to keep up appearances of a democracy and maybe more
expensive than the bother.
A fly on the wall reveals that reeling from the public
backlash MPS are now trying to extend the tax exemption to teachers, doctors
and other public servants, so that there plan is not seen for what it is – a
shameless grab for resources which, on close scrutiny, they have no right to over the rest of us.
