President Yoweri Musveeni has defended the high taxes on fuel saying most fuel is used for luxurious purposes. The government currently charges a 850 shilling tax per liter of petrol, 530 shillings per liter of diesel, and 200 shillings per liter of kerosene or paraffin.
Prices for food produce are high for many Ugandans
Speaking on Thursday evening during a live address about the high fuel prices and rise in food prices, Museveni said the government taxes petrol highly because people use it mostly “to drive and go to bars, and enjoy themselves”. He said most public transport vehicles and tractors which are vital in agriculture do not consume petrol but less taxed diesel.
The country is currently experiencing walk to work protests whose leaders say they are concerned about high prices of fuel, food and other key necessities, which among others they have attributed to “high government taxes”.
But the President generally defended his government’s tax regime saying most goods and services are not taxed. Museveni says Uganda’s tax to GDP ratio is the lowest in the region, at 12% of GDP, compared to Kenya’s 18% and Tanzania’s 16% tax ratio of GDP. He says some developed countries like Holland (Netherlands) have tax GDP ratio of 35% and he urged Ugandans to appreciate that taxes are needed to develop infrastructure and provide social services.
Museveni says government taxes are not the key reason for the increased cost of living Ugandans are currently experiencing today. He gives the example of Sugar, which he says is taxed 376 shillings per kilo, but sugar prices are going high at 2,700. He says the government gets 81 billion shillings in taxes from sugar, yet sugar would remain at a high price of 2,400 shillings if there were not taxes and the government treasury would not have the 81 billion shillings.
Museveni says it is difficult for the government to reduce taxes when it wants to improve infrastructure like roads construction and construction power dams. “Should we reduce taxes on fuel so that we drive vehicles cheaply. Should we forego infrastructure development? That is the dilemma,” Museveni said.
Traders in Uganda led by Kampala City Traders Association (KACITA) have been complaining of high government taxes which they say are response for increase in prices of most products.
Museveni criticized KACITA as “people making Uganda a market for outside products”, the major reason they keep crying about taxes. He says most of the imports are luxuries and government has to tax them highly while leaving exports and locally produced goods less taxed.
But Museveni defended another more expensive import that digs into the taxpayers money directly, the recent purchase of fighter jets worth 1.7 trillion Uganda shillings, which he says will help securely defends the country’s key resources especially oil. Uganda is planning to start oil production in Hoima and Buliisa districts where huge oil reserves have been confirmed.
Museveni also defended the spending of more than three billion Uganda shillings on his swearing in ceremony due on May 12th 2011 saying it will be used to entertain foreign leaders who will bring investments to Uganda in the longrun.
Museve who sounded calm and collected said he does not buy the argument of setting up food reserves to keep food prices low. He says it is not wise for the government to utulise scarce resources to buy food to store in reserves, instead his government decided to keep money in real cash. The President says the government would be forced to keep buying and selling food produce which expire, but decided on a better option of keeping cash which can help buy food when there is serious scarcity.