Why don’t we have high levies on old cars and Cigarretes?
The government’s taxation and fiscal policies fall short on one of their primary function. The Uganda’s current tax measures contained in its budget for FY 2105/2016 that was read to the parliament on June 10 2015 and commenced July 1 2015 are inadequate and insufficient of the functionality of the tax system. This is why: world over, governments use the taxation policies to: raise revenue for the government for their public expenditure, to reduce inequalities through a policy of redistribution of income and wealth, and for social purposes such as discouraging certain activities which are considered undesirable to the social and economic welfare and development of the masses.
It’s the latter goal of taxation that I seek to address in comparison with the new tax measures for Uganda in this financial year. It is amazing for parliament to slap such temporary actions of increment in the environment levies on used motor vehicles from 20% to 35% for motor vehicles of 5-10 years old and to 50% for those above 10 years while excluding the good vehicles as well as Ugx 45,000 per 1,000 sticks of soft cap cigarettes and Ugx 75,000 per 1,000 sticks of hinge lid cigarettes.
Cigarette smoke and emissions from old vehicles have adverse effects on the environment and the health of the population. There have been several accidents resulting from the poor mechanical conditions of the old vehicles reported to the country. According to the research on the Global Adult Tobacco Survey by Ministry of Health in 2013, 1.3 million Ugandans both women and men used tobacco in 2013 and made a monthly average expenditure of Ugx 20,730. As per the research by Center for Health, Human Rights and Development 13,500 people in Uganda die every year due to tobacco related illness.
While for old vehicles, it’s not a matter of debate that such time worn vehicles emit a lot of gasses which increase on the rate of carbon in the atmosphere. This leads to global warming which will subsequently result to more changes in the climate more than what we are experiencing now coupled with all its associated problems thereby rendering the human person insecure and unsafe in the world. For example, the WHO report of 2014, indicates that about 7 million lives are lost every year globally as result of air pollution. And the Kofi Annan Think-tank shows that about 300,000 deaths are registered across the world annually due to heat waves, floods and forest fires which are caused by global warming.
The current levies on these commodities are insufficient to protect the masses from the fore mentioned unhealthy effects yet government could have used such measures to restrict and cripple the use of these products which could substantially reduce the rate of consumption and importation of these harmful commodities.
The most appropriate mechanism to deal with these undesirable dimensions of the economy could have been putting a total ban on the production and importation of these commodities. However, this could appear to be a direct attack on these sectors and it may necessitate condemnations especially from legislators representing areas engaged in tobacco growing. On the side of those importing old vehicles, their argument may be based on financial inabilities to get brand new cars because of the high level of poverty waving through the economy but the high excises will restrict Ugandans from importing these old vehicles and probably push them towards acquiring brand new ones.
Taking the example of the Tobacco sector, the high dues would make the products of these companies expensive and un-affordable by the consumers hence the reduction in sales and the profits of these firms eventually leading to their collapse.
With the vitality of the environment on our being, hope in FY 2016/2017, the executive and the legislature could consider imposing high environmental levy not only to these two subjects under discussion but also on the companies, firms, equipment which emit carbon to the environment. The revenue collected from this would be used by the government to correct the indemnities that could have been caused on the environment through afforestation and other programs that aim at restoring the integrity of the environment.