The ministry of Finance has proposed an annual license fee of Shs 200,000 for all car owners as part of the revenue sources to fund the FY 2021/2022 budget.
State minister of Finance David Bahati, says that the move is intended to streamline the transport sector by getting rid of illegitimate cars and raising money for the maintenance of roads across the country. According to the breakdown, car owners will pay Shs 200,000 while motorcycle owners will pay Shs 50,000 annually.
Bahati was today defending the new tax bills before the parliament's finance committee chaired by Henry Musasizi. If passed, the proposal will come into effect on July 1, 2021. It is embedded in the Traffic and Road Safety Act (Amendment) Bill, 2021 which seeks to impose a license to permit ownership of a motor vehicle, trailer or engineering plant.
This implies that to use the vehicles on the road, one will need a road license, issued differently from the driver's license. Anyone who fails to pay for the road licence could be jailed for two years, pay a fine of Shs 2 million or suffer both imprisonment and fine. Bahati told the committee that if this license is introduced, the country will have roadworthy vehicles and at the same time, the government will get funds to maintain the roads.
"It further proposes to provide for an annual fee to be paid by every person who owns or possess a motor vehicle, trailer or engineering plant or uses it on the road on or before the 31st of January of every year as may be prescribed by the minister…We think if we introduce this, we shall have roadworthy vehicles on the road and at the same time try to generate revenue to maintain our roads." said Bahati.
Nandala Mafabi, the Budadiri West MP wondered why the government backtracked from its previous plans of imposing taxes on fuel yet the car license fees was earlier scrapped because it was hard to implement. He says this could increase the rate of corruption where motorists would be paying less money to the officers so as to obtain the licences.
Committee chairperson Musasizi asked why the government insists on imposing direct taxes that are hard to implement and also questioned how owners of vehicles parked at home will be charged yet their cars are not on road. The government has projected to raise revenue to a tune of Shs 22.408 trillion with tax measures alone raising Shs 400.93 billion for the financial year 2020/21.
Last week, the minister of Finance, Matia Kasaija tabled tax measures seeking to make amendments to a number of bills including, Excise Duty Act, External Trade Act, Fish Act, Income Tax Act, Mining Act, Stamp Duty Act, Tax Appeals Tribunal Act and Tax Procedures Code Act. The others are; Tobacco Control Act, Traffic and Road Safety Act and Value Added Tax Act.