Ugandan MP Urges Treasury to Stop PAYE Deductions on Councillors' Allowances

Ugandan legislator Betty Ethel Naluyima has challenged the Permanent Secretary and Secretary to the Treasury, Dr. Ramathan Ggoobi, to enforce a Finance Ministry directive that exempts local government councillors' allowances from Pay As You Earn (PAYE) tax. According to Naluyima, these allowances fall below the taxable income threshold and should not attract deductions by the Uganda Revenue Authority (URA). This issue was raised during a Parliament's Public Accounts Committee (Central) session where Dr. Ggoobi and his team were responding to queries from the Auditor General's report for the 2024/2025 financial year.

Naluyima reminded Dr. Ggoobi of an earlier commitment by Finance Minister Henry Musasizi to engage URA and resolve the controversial deductions affecting councillors' allowances. She questioned whether the Ministry of Finance had formally communicated the directive to the Ministry of Local Government to ensure that the deductions are stopped in subsequent payments. The legislator emphasized that councillors deserved clear assurance that their allowances would be protected, noting that the matter had already been raised on the floor of Parliament and required concrete action.

Dr. Ggoobi responded that he had learnt about the matter through media reports but had not yet received a formal briefing because he had just returned from abroad. He pledged to review the matter and provide an appropriate response after obtaining the necessary information. Naluyima expressed concern over the delay, urging the PSST to treat the matter with urgency and ensure that councillors are not subjected to tax deductions that the government has indicated should not apply.

The Finance Ministry's directive to exempt councillors' allowances from PAYE tax aims to address concerns about the deductions affecting local government officials. According to Naluyima, the allowances are below the taxable income threshold, and therefore, should not be subject to PAYE deductions. The legislator's push for the Treasury to enforce the directive is crucial in ensuring that councillors receive their full allowances without deductions.

The matter now awaits further clarification from the Treasury, particularly regarding the formal communication and implementation of the Finance Ministry's position on PAYE deductions from councillors' allowances. The outcome of this issue will have implications for local government officials who have been affected by the deductions. It is essential that the Treasury provides clear guidance on the implementation of the directive to avoid further confusion.

The Uganda Revenue Authority (URA) has been deducting PAYE tax from councillors' allowances, which has caused concerns among local government officials. The Finance Ministry's directive to exempt these allowances from PAYE tax is a step towards addressing these concerns. However, the implementation of the directive requires clear communication and coordination between the Ministry of Finance, the Ministry of Local Government, and URA.

The issue of PAYE deductions from councillors' allowances highlights the need for effective communication and coordination between government agencies. The Treasury's response to Naluyima's concerns will be crucial in resolving this matter and ensuring that local government officials receive their full allowances. The Parliament's Public Accounts Committee (Central) will likely continue to monitor the situation and ensure that the necessary actions are taken to implement the Finance Ministry's directive.

Key points

• The Finance Ministry's directive to exempt councillors' allowances from PAYE tax aims to address concerns about the deductions affecting local government officials.