Government has abandoned the proposal to impose a Shs. 200,000 license fees on vehicles and instead introduced a Shs.100 tax per litre of fuel to raise revenue, according to Finance Minister in charge of planning David Bahati who was appearing before the Finance committee chaired by Henry Musasizi.
But Motor bike owners will pay Shs. 50.000 annual fees under the 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 the current level revenues being generated must be maintained.
“That’s why we have imposed a modest Shs. 100 excise duty per litre on diesel and petrol. This measure is expected to generate 196 billion shillings.” Bahati said.
“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 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Another proposal withdrawn is the proposed levy of 0.4 dollars or 1,440 shillings per kilogram on wheat bran, cotton cake, maize bran or any other by products of the milling industry,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 Shs.20 billion.
The Ministry has also replaced the flat Shs.70,000 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.
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