Gov’t Introduces UGX100 Tax on Fuel Instead of Car License

Government has abandoned the proposal to impose a 200,000 shillings license on vehicles and instead introduced a 100 shillings tax on fuel to raise revenue.
Consumers are feeling the effect of the increase in global fuel prices'

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Government has abandoned the proposal to impose a 200,000 shillings license on vehicles and instead introduced a 100 shillings tax per litre of fuel to raise revenue.

This was revealed by Finance Minister in charge of planning David Bahati who was appearing before the Finance committee chaired by Henry Musasizi.

Government had introduced the proposal including a 50,000 shillings annual license fee for motorbikes under Traffic and Road Safety Amendment bill 2021.

According to Bahati, although Government has critical expenditure pressures, it is constrained to generate resources through borrowing, yet Government needs to maintain the current level revenues being generated. 

He says that it is in this regard that they have opted to compensate for the loss of revenue earlier projected from the proposals on motor vehicle and motorbike annual licensing of 200,000 shillings and 50,000 shillings respectively by putting a modest increase in excise duty by 100 shillings per litre in diesel and petrol.   

This measure is expected to generate 196 billion shillings.  

He says this proposal is based on the decision of the committee not to impose another direct tax on ownership of motor vehicles to avoid compliance and challenges.   

“The increase is not expected to cause significant increase in pump prices. We estimate that an increase of 100 shillings per litre in excise duty will increase  pump prices by 100 shillings assuming the entire increase in duty is passed on to the consumer and the exchange rate and international fuel prices remain constant” Bahati told the committee.  

He says the proposal could return at a time when Government is prepared.

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He adds that 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 road.

Bahati however stated that the proposed fees to be introduced by the regulation, at registration on importation of motor vehicles of 300,000 shillings and motorcycles of 50,000 shillings which are a one off should remain.

Ilukor Charles, the Kumi county MP questioned why Government was introducing more tax on fuel yet fuel is already expensive.

Petrol  currently retails on average at 3,991 shillings per litre, while 3,667 shillings.

Another proposal withdrawn is the proposed levy of 0.4 dollars or 1,440 shillings per kilogram on wheat bran, cotton cake, maize bran or any other by products of the milling industry, which was expected to generate 20 billion shillings.  

The Ministry has also replaced the flat 70,000 shillings export levy per kilogram of fish maws exported, amending instead by introducing a 10% charge on the value of fish maws exported out of Uganda.This proposal is expected to generate 10 billion shillings, initially.