What Shs100 tax levied on fuel means for motorists

Wednesday May 05 2021
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A pump attendant fuels a car in Kampala on April 28. PHOTO/ALEX ESAGALA.

By Andrew Bagala

Motorists who protested the reintroduction of annual road licence fee of Shs200,000 for vehicles and Shs50,000 for motorcycles will now pay more than twice after the government dropped the proposal for Shs100 tax on a litre of fuel.

Some motorists will pay 10 times more than the amount of money they would have paid in annual licence fees. 
The government wants the fuel tax to fetch more from Shs196 billion.
According to the Daily Monitor calculations, motorists with a high mileage will spend as high as Shs16m annually after paying the additional Shs100 per litre on fuel. 

A commuter taxi operating in Kampala Metropolitan area will pay thrice of what he or she would have paid in annual road licence fees. Taxis that ply the shortest distances of around 12kms to and from Kampala City consume 20 litres of fuel a day on average, according to drivers. 

This means a taxi driver on Kampala-Ggaba Stage will spend around Shs600,000 annually after the tax increment on fuel. The lowest a public service van would pay starting July 1 would be Shs1,800 increment in taxes on fuel per day.

Commuter taxis operating on the outskirts of Kampala Metropolitan area consume between 25 and 30 litres of fuel a day, which translates into around Shs825,000 per annum.

Mr Rashid Ssekindi, the chairperson of Kampala Operational Taxi Stages Association (KOTSA), said drivers who will travel 260kms and more per day will pay not less than Shs1.6m annually. 

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“Shs100 doesn’t seem big to many people. But when you make a summation, the annual amount is staggering. Mind you, we pay other taxes. Each taxi pays not less than Shs10m annually in taxes on fuel. If you add other direct taxes, we are left with nothing,” Mr Ssekindi said. 

He said they would pass the tax increment onto the passengers. 
However, their ideal target is by increasing the taxi fares by Shs500 within the city centre and Shs1,000 to those upcountry. 

“We are in trouble. Many of our passengers learnt to walk to work during the lockdown. We haven’t seen a surge in the number of passengers since,” he said.
Private motorists, who are the majority, will feel the pinch lesser than public vehicles while bus companies will pay heavily.
Mr Nsubuga Kizito, a bus operator in Kisenyi Bus Park, said a bus plying the Kampala-Kabale route consumes around 324 litres a day. 

This means each bus plying the route will pay not less than Shs10m in taxes on only the Shs100 increment on fuel a year. 
The current buses on the market on average use 38 litres per 100Kms. Bus owners haven’t yet made a decision on whether they will pass on the tax burden to the passengers or not.  

Truck operators said the Shs100 tax increment on fuel at the time when they are facing travel delays due to coronavirus restrictions, especially at borders would only lead to increase in transport cost.  

Container transportation
Mr William Busuulwa, the head of Uganda National Transporters Alliance, said the transport cost had already increased by more than Shs1m for semi-trailers because of delays and new costs in testing drivers and turn-boys at the borders. 
He adds that the Shs100 increment on each litre of fuel will exacerbate the worse situation.  

“Transport of a 20-feet container from Mombasa Port in Kenya to Kampala City, Uganda, has increased from $2,200 (Shs7.8m) to $3,000 (Shs10m) during the coronavirus pandemic. If you add a new increment on fuel, we shall have an additional cost of Shs140,000 on 1,400 litres that a semi-trailer consumes on the route,” Mr Busuulwa said.

Mr Busuulwa says the cost accrued from the fuel tax increment will be paid by the end user.

Mr Kanyike Kiviiri, the leader of the Kampala Metropolitan Boda Boda Entrepreneurs Association, said motorcyclists use an average of three litres a day. This brings the annual total amount accrued from the fuel tax increment to Shs109,000. 

Most of the private car owners within Kampala area that Daily Monitor talked to said they consume fuel ranging between Shs10,000 and Shs40,000 per day. 
On average, private car motorists used three litres a day, which totals  about Shs100,000 a year. 

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The new taxes will have an impact on several sectors driven by fuel for instance the transport industry.


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