The Ministry of Finance, Planning and Economic Development has chickened out of slapping tax on owners of vehicles and motor cycles and instead transferred the controversial tax to fuel.
The latest move was unveiled by David Bahati, State Minister for Planning while appearing before Parliament’s Finance Committee, three days before Parliament embarks on debate on the tax proposals next week.
While tabling the new amendments to the Excise Duty Amendment Bill 2021, Bahati admitted that it would be hard to implement compliance on vehicle license fee and instead opted for the common tax on fuel so as to compensate for the revenue gap created with walking away from the tax on vehicle license.
In the proposed amendment, Shs100 will be charged on each liter of diesel and petrol, and Bahati said the increase on fuel prices won’t create a bog impact on transport costs because Uganda’s roads are in a good state and won’t affect wear and tear of vehicles.
The Minister said, “This increase is not expected to cause significant increase on the pump prices. The impact on transport will also be minimal because of the good infrastructure which reduces on the wear and tear of vehicles and time spent on the roads.”
Government had anticipated generating Shs20.5Bn from vehicle license fees although the tax measure faced protest with MPs arguing it would increase corruption within traffic officers while enforcing the said tax proposal.