Why don’t we have high levies on old cars and Cig­a­r­retes?

By: MUSA MU­GOYA

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.