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Budget: Government cautioned against proposal to raise taxes on fuel

A fuel price chart. Finance minister Matia Kasaija has proposed the introduction of new taxes on fuel to finance the country’s Shs18.3 trillion Budget for 2015/16 financial year. FILE PHOTO

Kampala. Consumers should tighten their belts for they are going to dig deep into their pockets as government looks to increase fuel prices in the coming Budget.
This follows Finance minister Matia Kasaija’s proposal to introduce new taxes on fuel to finance the country’s Shs18.3 trillion Budget for the financial year 2015/16.
The minister in the Finance Bills seen by Daily Monitor wants excise duty of Shs1,000 charged on every litre of fuel (gasoline); gas oil (automotive, light, amber for high speed engine) will be charged Shs680 per litre.

Because of this action, players in the market are saying the consumer will have to bear the wrath of increased prices.
Giving his views on the Finance Minister’s proposal in an interview with Daily Monitor yesterday Vivo Energy Uganda’s chief executive officer Hans Paulsen, said: “I haven’t studied the proposal yet but if government is introducing new taxes on fuel, the direct impact will be higher prices for consumers.”
Hashi Energy’s general manager Peter Ochieng, while commenting about the government proposal, said: “This will mean the cost of doing business will go up and so will the pump price.”

In the financial year ending 2014/2015, government increased the taxes levied on petrol from Shs900 to Shs950, diesel Shs580 to Shs630 and introduced a Shs200 excise duty on kerosene.
Experts say this proposal unfortunately comes at the time when the prices of fuel on the international market have dropped by almost 50 per cent, currently trading below $50 (Shs149,150) something which would be translated into seeing pump prices cut.
Currently, government charges Shs950 on every litre of petrol (gasoline) and Shs630 on each litre for diesel.
Responding to the minister’s proposal, Consumer Education Trust’s director of programmes Shaban Sserunkuuma, appealed to government to rethink its position.

“Government is taking a dangerous direction because new taxes on fuel will increase the price of everything since fuel as a complementary commodity will have a ripple effect on transport, food and manufacturers will find the cost of doing business high,” Mr Sserunkuuma noted.
He asked government to rethink its position for the welfare of the citizens who are already battling with the depreciating Shilling.
The minister has proposed to increase excise duty on non-premium beers, and revise the rate of excise duty payable on under- natured spirits.
Mr Kasaija said on every 1,000 sticks of soft cap cigarettes Shs45,000 tax will be introduced and for every 1,000 sticks on hinge lid cigarettes, a Shs75,000 tax will be charged.

Impact of high tax
If the Finance Minister’s proposal to increase tax on fuel goes through Parliament, most likely in its June Budget, the cost of petroleum will rise, eroding the relief motorists have been getting at the pump with the fall in crude oil prices.


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