Parliament’s Finance Committee have rejected the proposal by the Ministry of Finance to increase tax on fuel products.
In their recommendations to Parliament, through the report on Excise Duty Amendment Bill 2020, the Committee argued that considering the current situation caused by COVID-19, where the whole country is on lockdown with all major production sectors of the economy closed, the current excise duty rates should be maintained so as to stimulate the economy and enable it to recover.
The Committee argued that given the certainty of a ripple effect of on increase in fuel costs on other sectors of the economy, the proposed increase of Excise Duty under; cigarettes, Beer, spirits, wine, non alcoholic beverages, Fuel, Lubricants, Motorcycles registration should be dropped.
In the proposed tax regime for 2020/2021, Government had proposed to increase Excise Duty on petrol by Shs150 per litre from Shs1,200 per litre to Shs.1350 per litre and diesel by Shs150 per litre from Shs880 per litre to Shs 1030 per litre.
Government had also proposed that Excise Duty on Kerosene be increased by Shs.100 per litre from Shs.200 per litre to Shs.300 per litre.
However, the proposals were rejected with MPs arguing that an increase in excise duty on petrol and diesel will result in an increase in prices of commodities since most of them are transported from the producers to the markets as well as services as service providers will experience an increase in over whole costs.