The government is set to write off more than Shs35 billion in tax arrears owed by tea factories as part of a wider intervention aimed at reviving Uganda’s struggling tea industry, Deputy Speaker of Parliament Thomas Tayebwa has said.
Tayebwa announced the development on Tuesday while representing President Yoweri Museveni at the burial of the late Mrs Edna Kentaro Baryaruha in Bushenyi District.
He said the arrears will be waived as soon as Parliament resumes from recess. The decision follows sustained efforts by Members of Parliament from Greater Bushenyi and other tea-growing areas to address challenges facing the sector.
“The minister directed that, when we resume Parliament, we will write off tax arrears worth more than UGX 35 billion. I want to thank MPs from Greater Bushenyi who have worked hard on this issue,” Tayebwa said.
The planned tax relief is expected to ease the financial burden on tea factories, some of which have struggled with accumulated debts and other operational challenges amid a prolonged crisis in the sector.
Tayebwa said the government was also working to streamline other issues affecting the management and operations of tea factories. He noted that accumulated tax obligations had become a major obstacle hindering the resumption of operations at some factories.
“The other issues will also be streamlined to ensure that factories are run better,” he said.
Tayebwa also revealed that the government is undertaking a deeper review of the tea sector to support long-term sustainability of the sector.
The announcement comes amid growing concern over the future of Uganda’s tea industry. Tea prices fell sharply in the past year as international demand weakened while large volumes of tea continued to enter the market, creating an oversupply that pushed auction prices down.
Political and economic disruptions in key importing countries, including Sudan, further reduced demand for East African tea. Uganda, which relies heavily on the Mombasa auction and mainly produces CTC black tea, was particularly exposed to these market shocks.
The price slump has also been compounded by concerns over tea quality and rising production costs. High fertiliser and input prices have made it harder for farmers to properly maintain their plantations, affecting the quality and quantity of green leaf supplied to factories.
When factories earn less from exports, their ability to pay farmers and meet operating costs is squeezed, creating a cycle of low farmer payments, declining investment in tea gardens and financial distress among processors.
But Tayebwa said the government has a bigger plan for the tea sector, which includes a Shs212 billion investment.
The money, he revealed, has been earmarked for investment in the tea industry, but only factories that demonstrate that they are efficiently and effectively managed will qualify for the funds.
President Museveni last year in Bushenyi, engaged tea farmers and processors over the crisis facing the sector.
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