Officials at the Uganda Road Fund (URF) have defended the proposed Shs 100 tax on a litre of petrol, noting that it will contribute significantly to Uganda’s local capacity to maintain roads countrywide.
Government proposed the fresh levy on fuel beginning 2018/19 in order to raise an estimated Shs 202 billion for road maintenance.
The URF, a body mandated with funding road maintenance, has been receiving Shs 417 billion each financial year and will now receive Shs 622 billion shillings next financial year, which money it is anticipated shall partly be raised from the additional tax on fuel.
“Our concerns have been that we are putting a lot of emphasis on development of roads but little in their maintenance. This increment will be a statement that government is determined to maintain the roads,” Michael Odongo, the URF executive director, said.
“We want to ensure that the roads remain open throughout the year and that all the bottlenecks are removed.”
Odongo was addressing journalists on May 11 at his office in Nakasero. He also announced the release of Shs 127.3 billion. The money was for agencies and sub-agencies for maintenance of various categories of roads for the fourth quarter of this financial year.
The designated agencies include Uganda National Roads Authority, KCCA, 121 districts and municipalities and their sub-agencies.
The agencies, especially the districts according to Odongo, have been having limited capacity in terms of equipment and manpower. But progressive improvement of manpower will shortly be recorded and “we hope by the end of the next financial year, we shall be talking of a different story”, he said.
“Next year, agencies will have no room for complacency. We have all the equipment to achieve (through road maintenance) reduced journey times and safety on our roads,” Odongo said.
Nathan Byanyima, a URF board member, said six districts and two municipalities will not receive monies because they did not submit accountabilities for quarter two.
About 10 years ago, a litre of petrol used to cost Shs 1,950 but this price has increased to Shs 4,000 currently.
Sector players say this is caused by unrelenting government taxation of fuel imports, which forces dealers to transfer the cost to the end consumer, and the constant fall of the shilling against the dollar.
Already, the government charges a flat rate of Shs 1,200 in taxes per litre of fuel. This will go up to Shs, 1,300 if the new increment comes into force.
Fuel dealers are also separately charged assorted operational related taxes depending on the size of their businesses and how much they import, according to Uganda Revenue Authority. These include a 6% withholding tax on the customs value of the goods and 2% import licence commission, among others.