Why Parliament rejected bill on motor vehicle licences

The Traffic and Road Safety Act (Amendment) Bill 2021 that was seeking to introduce a license fee for motor vehicle owners payable annually was rejected by Parliament on Monday.

The Bill was first presented to Parliament in April but the government failed to meet favour with the Committee on Finance, Planning and Economic development who unanimously recommended that it must be dropped.

According to Jane Pacuto Avur, the Pakwach woman Member of Parliament who presented the committee report, saw the proposal as double taxation since the motor vehicles are met with a tax when they come into the country.

According to the committee, the tax would impose a high cost of doing business for those in the tourism industry and companies running large fleets since they would have to pay annual license fees.

“Government had earlier in 2007 repealed the same tax and introduced it as a tax on fuel because it had a negative implication. It causes difficulty in tax compliance and administration often resulting in corruption tendencies,” Pacuto added.

The committee proposed that the government considers imposing indirect taxes in this sector as a means to collect revenue.

The recommendations were further met with strong support from other MPs who questioned the government’s intentions to re-introduce the tax.

Jonathan Odur from Erute County South who termed the tax the regime as ‘regressive’ said that it was going to be counteractive to the government’s intentions to increase its resource envelope.

“The justification for transferring the road license cost to fuel was because it bred corruption and was cumbersome to collect at the time,” he said.

Odur added that it is erroneous for the government to claim that motor vehicles are currently not paying taxes. He said that the taxis are paying advance taxes and license per seat depending on the sitting capacity.

“These taxes are overwhelming to fleet operators making it difficult for businesses to survive. In fact, the Minister should never return to this Parliament with such a regressive tax,” Odur added.

The Minister of State for Planning, Hon David Bahati said that he held discussion with the Committee on the matter to which they agreed that the government should first prepare a system to assess the roadworthiness of vehicles and assist tax collection in that area.