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Finance Committee Rejects UGX 200,000 Annual Car License

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Henry Musasizi, the Chairperson of the Finance Committee said that they are considering approving only six out of the seven proposed new tax amendments to help the government raise revenue.
On top of holding a drivers license, car owners in Uganda will be required to pay for a road licence
Parliament’s finance committee has rejected a  proposal by the government to introduce a  licence of 200,000 Shillings license on motor vehicles and 50,000 Shillings for motorbikes. The Ministry of Finance has proposed the fees as part of the revenue measures to fund the 2021/2022 budget.

If passed, the proposal would come to effect on July 1, 2021. It is embedded in the Traffic and Road Safety Act (Amendment) Bill, 2021 which seeks to impose a license to permit ownership of a motor vehicle, trailer or engineering plant.

On Tuesday, the State Minister of Finance David Bahati said that the move is intended to streamline the transport sector by getting rid of illegitimate cars and raising money for the maintenance of roads across the country.

However, on Thursday, Henry Musasizi, the Chairperson of the Finance Committee said that they are considering approving only six out of the seven proposed new tax amendments to help the government raise revenue. Musasizi made the revelation after a meeting with the Civil Society Organization (CSOs), Uganda Breweries Limited and Century Bottling Company who were submitting their views on the new revenue proposals.  

He said the plan is also to approve the 30 per cent or 250 Shillings tax on locally made alcohol, 70,000 Shillings on each kilogram of fish maw and 30 per cent on all rental houses among others.

“We shall pass the six new tax amendments apart from the annual 200,000 Shillings fee in the spirit of raising revenue from the government. The other stakeholders we are meeting today are just coming here to give us their input not to reject the taxes,” Musasizi said. 

However, Musasizi said that 12 per cent of data will be approved since members of the committee have not protested it. He says that 12 per cent is actually a fair tax and that it can easily be collected. He says that if any challenge arises, they can review the tax after 12 months. 

“12 per cent on data is not much. For example, some people use up to 500,000 Shillings worth of data per month, now 12 per cent of that is only 6,000 Shillings, ”Musasizi said.

However, Regina Navugga, the Program Coordinator Financing for Development at the Southern and Eastern Africa Trade Information and Negotiations Institute-SEATINI rejected the 12 per cent tax on data and the annual 200, 000 shillings license for motorists.  She proposed that the tax on data be reduced from 12 to 5 per cent.

Navugga said that although there is an increase in the use of data services, the revenue from the services including airtime is dwindling and adding more tax on data could further reduce the revenue collected.

The Uganda Breweries Managing Director Alvin Mbugua welcomed the 30 per cent or 250 Shillings tax on beer. He however said that there are concerns that government could impose another new tax on traditional fermented beverages.