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Uganda: Govt seeks to raise Shs35b from motor vehicle licence

  —- Government has proposed a Shs200,000 levy, which every motor vehicle owner will have to pay in annual license starting July 1.

The levy, according to sources within the Ministry of Finance that requested anonymity to speak freely, will seek to mobilise at least Shs35b annually.
However, the final figure, sources said, will have to be determined by Parliament after debating the details of the amendments.

The levy is contained in the Traffic and Road Safety Act (Amendment) Bill Supplement, in which Finance Minister Matia Kasaija provide for the licence for possession of a motor vehicle and repealed some schedules provided for under the Finance Act, 2006.

At the weekend Mr Kasaija declined to comment on the matter, noting details would come through after the proposal has been debated before Parliament.

Mr Patrick Ocailap, the Deputy Secretary to the Treasury, said that whereas he had no details of the proposed figure, he was aware of discussions within Ministry of Finance and other government agencies about the matter.

Finance Ministry spokesman Jim Muganga at the weekend said that whereas he was not aware of the projected revenue collections, the tax proposal shall take effect as and when the Minister of Finance will guide.

“These are proposals. They are being discussed at Parliamentary sub-committee level and then they will go to Parliament before the Budget Speech. So, until the Budget Speech is read, I cannot say this or the other,” he said.

However, in the March 24 Traffic and Road Safety Act (Amendment) Bill Supplement, Mr Kasaija indicate that the proposed motor vehicle license “shall be deemed to have come into force on July 1, 2021.

Last week officials in the Ministry of Finance also told Daily Monitor that apart from introducing a new license for all motor vehicle owners, government would also revise all licenses for commercial motor vehicles upwards.

Previously, it had only been commercial vehicles that had been required to pay an annual license with figures for different motor vehicle categories last revised about six years ago under the Finance Act, 2015.

Currently, commercial vehicles pay an annual license of between of Shs200,000 and Shs1.5m, which is graded in accordance with the capacity of the motor vehicle.
However, Daily Monitor could not immediately ascertain what the new proposed revisions for commercial vehicles will look like.

The licence for possession of a motor vehicle, is among a raft of tax measures through which government will, in the next financial year, seek to increase local revenue mobilisation at a time when a number of tax sources have been ravaged by Covid-19.
The tax, which had been abolished in the 90s, had been replaced by a new levy on fuel.

However, sources told Daily Monitor that motor vehicle owners will have to incur on both levies in addition to Motor Third Party.

In March last year, Uganda Revenue Authority handed over the warehouse and database of Motor Vehicle Registration records to the Ministry of Works, in a process that sought to digitise and archive all motor vehicle registration records.

Uganda has close to one million motor vehicles with an annual import stock of at least 5,000 units, according to Uganda Revenue Authority.

Other queries

Government, through the Ministry of Works and Finance, has been seeking ways through which it can mobilise more funds towards the roads sector, which takes one of the biggest budget allocations.

A number of measures, including reintroduction of road tolls on some roads through the Road Tolling Policy have already been agreed on with government arguing that whereas it commits a sizeable amount of the national budget towards funding the road infrastructure, the available funds have not been able to meet development and maintenance needs.

According to the Road Tolling Policy, Uganda, by 2017 had an established road network of 144,785 kilometres of which only about 5,300 kilometres, representing 4 per cent were paved while the largest network of 96 per cent was still gravel or earth surface.

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