#OutToLunch: Reintroduction of annual car license is counterproductive

By Denis Jjuuko

There are new tax proposals for the next financial year that have caught the eyes of many. One is the introduction of a 12% tax on internet bundles. Apparently, the Over The Top (OTT) tax charged on social media isn’t that successful. Either the number of people who use social media had been exaggerated before the tax was introduced or there are many people using Virtual Private Networks (VPNs) to bypass the tax.

But I guess everyone who is in the business of tax collection knows that for one to realize significant revenues, it must be easy for people to collect the tax in the first place. Once a tax is cumbersome to collect, the collector will face serious hurdles in doing their work. Also, people will naturally use such hurdles to dodge paying the tax.

Yet the proposal to scrap the OTT tax I thought had taught our tax collectors some important lessons. In the same documents seeking to scrap the OTT tax, there is a re-introduction of the annual vehicle license. Many years ago, the tax collector rightly argued that collecting annual license fees from motorists was cumbersome and there were many loopholes. The right thing, the argument at the time went, was to put this tax on fuel. So every time you fueled the vehicle, you paid your annual license fee.

This tax was easy to collect. It was cheap to do so as well. Instead of putting road blocks to check if cars had valid annual licenses, the tax collector simply ensured that petroleum companies remitted the money. There are fewer petroleum companies than vehicle owners and they risked being banned and their assets sold if they didn’t comply.

Previously, many annual license certificates were made on Nasser Road while some people comfortably bribed those manning the road blocks. Although there is technology now to ascertain whether a license is genuine or not, I believe that Uganda doesn’t have the resources to enforce this kind of tax collection at the moment. Many vehicles on Ugandan roads aren’t road worthy or don’t even have the proper paper work like third party insurance but they freely move on the road. Many people in Uganda don’t have driver’s licenses. The police simply can’t fully enforce this. Uganda Revenue Authority’s law enforcement won’t be able to monitor the roads for valid annual road licenses.

So if collecting OTT where technology can easily be deployed to enforce it has failed, how will the annual vehicle license be collected? Will the levy on fuel be scrapped? Or it is a case of double taxation? What has really changed over the last few years since it was scrapped that now it is important to put it back? How much will the government spend on collecting this tax?

There was a time when telecoms charged monthly service fees. They realized that this was a barrier to entry for many users and scrapped them. They still charge us service fees but we don’t notice it as it is embedded in the airtime fees we pay. That way, they have been able to significantly grow the number of users.

There aren’t very many vehicles in Uganda. There are less than 500,000 units. Outside a 100km radius of Kampala, you hardly see any cars on the road. The reason Kampala has a lot of vehicular traffic is because we don’t have public transport to write home about. The roads are potholed and narrow creating an impression that there are many cars in Uganda. On average each private car in Kampala carries only two people.

Transport is a key factor that facilitates economic growth. The re-introduction of annual vehicle licenses will increase the cost of doing business thereby impeding other areas that URA should be keen to tax. When the cost of doing business is high, there are reductions in the income taxes that URA will be able to collect. Workers’ earnings will be cut thereby creating low purchasing power.

With low purchasing power, the economy will shrink and the tax collectors will realize less taxes. The government’s efforts, therefore, should be on growing the economy and widening the tax base not to overtax the same things such as vehicles.

Government should be interested in seeing that we have an effective urban public transport system that can reduce the expenses of workers so they can spend their savings elsewhere on stuff that keep factories running and shops open.

The writer is a communication and visibility consultant. djjuuko@gmail.com

Related

Out to Lunch

#OutToLunch: Favourable interest rates are good for everyone, not just government blueprint for politicians and entrepreneurs building churches

#OutToLunch: A blueprint for politicians and entrepreneurs building churches By Denis Jjuuko When it comes to religion, many times politicians, billionaire entrepreneurs, the middle class and other classes agree. At least on building magnificent houses of God. Across Uganda, many people have contributed or even single handedly built these houses of God. Fancy to a fault, majestically standing on hills with spires that compete with those seen in Hollywood movies. Many of these worship centres, particularly those single handedly built by one person or a family with their friends, are usually located in rural areas where the funders were born, walked barefoot to school before migrating to Kampala to find fortune and fame. The floors are of Italian or Spanish marble, porcelain or at worst polished terrazzo. Stained glasses with the beautiful image of the Virgin Mary complete the curvy life size windows. The pews are of the hardest wood. The world’s best sound engineers come in to install the public address system. The house of God must be fancy. Once construction is complete, they call in their Kampala friends for the grand opening. The clergy lines up at the foot of the building to welcome them. The parking lot is full of the most expensive SUVs. The parishioners walk in every prayer day fearful of stepping on the floors, sometimes so shiny that they see their own body reflections. Their best clothes can’t even be used to clean the pews. They can scratch them. For a moment, the poor are in heaven before returning to their houses where floors are screeded with cow dung. There is nothing wrong with people using their fortune and connections to build grand churches or mosques. It is their money; their appreciation of what God has helped them achieve. They no longer have some of these other problems so they can “give back” to God. The problem is whether the grandeur church is what the community really needs. Shouldn’t politicians, the rich and famous first do a needs assessment? Usually, besides the magnificent house of God stands a school with a falling roof or whose walls are being held in place by crooked timber poles. Windows are just wide openings where mild steel frames would do. Inside some of the classrooms, are anthills. Pupils sit on logs and like their homes, the cow dung is the main material used for floor screeding. Teachers look like they last had a decent meal on Christmas day. The health centre is miles away and poorly equipped. The only hope for survival whenever they fall sick is through prayer in the church built for them by the only person who was lucky enough to survive the biting poverty. Yet the funders go to India or Kenya or Germany whenever they feel any discomfort. And are not afraid to give testimony that last time they fell sick, they traveled to Europe for better management and while there, they were thankful to God for their life hence the magnificent church building. Yet the blueprint for an impactful church exists. In most cases wherever the Catholics built a church, they built a school as well and almost everywhere they set up their regional headquarters (read a diocese), they built a functional hospital. They knew that you can’t pastor the dead! They also knew that an educated population is good for them and their beliefs. Some people call it sustainability and perhaps that is why they have existed for millennia. You saw how they put on a show at Pope Francis’ funeral. Why can’t politicians and billionaire businessmen do the same? If you have Shs6 billion (nearly US$2 million) like we heard of the Ssembabule church or the one in Mitooma, why not build a church of Shs2 billion, a school of Shs2 billion and a healthy centre of Shs2 billion? You could also may be build all those with about 70% of the kitty and create an endowment fund with the remaining 30%. The annual interest from the fund could be used to operate the school and the hospital. If 30% of Shs6b is invested say in a long-term treasury bond, it could give a net return of approximately Shs255m per a year or Shs21.3m per a month, enough to subsidize a rural school and health facility. Alternatively, an income generating project could be established alongside the church building. A factory to add value for the parishioners. It could be a dairy plant or a coffee factory depending on the area. A scholarship for the needy bright students could be another alternative. That way people wouldn’t have to meet their creator ahead of time. The writer is a communication and visibility consultant. djjuuko@gmail.com

Read More »
Out to Lunch

#OutToLunch: Favourable interest rates are good for everyone, not just government only we could learn from Pope Francis

#OutToLunch: If only we could learn from Pope Francis By Denis Jjuuko The death of Pope Francis came a little bit as a surprise. He had been seen publicly on Easter Sunday, another surprise, blessing the faithful from the balcony that overlooks St Peter’s Square. Even though he was visibly weak, it seemed he was on the road to recovery after spending more than a month in hospital being treated of double pneumonia. He was 88 years old. Pope Francis is the third pope to die in the last 20 years following John Paul II in April 2005 and Benedict XVI in December 2022 even though he (Benedict) had long resigned from this position due to ill health. That decision of Benedict to resign allowed Francis to assume office in March 2013. Less than two years after his election, Pope Francis made the long trip to Uganda, becoming the third pope to do so largely thanks to the Uganda martyrs. And like most of the papal visits especially to countries like ours, everything comes to a standstill. Roads are paved, buildings are rehabilitated and grass is planted, public holidays granted and that wasn’t any different in 2015. People traveled from far and near to attend the mass that he led. Even our politicians who usually don’t see eye to eye were seen shaking hands at the Uganda Martyrs Shrine in Namugongo. One wished the pope visited every day! Those who met the Pope either in Uganda, the Vatican or elsewhere all talk about his humility. As he departed Uganda, a photo is shared of him climbing the steps to his Shephard One aircraft at Entebbe International Airport. He was walking alone, one hand sometimes holding his papal soutane, and another carrying a black bag, perhaps with personal belongings. He could have had as many aides as he wished. He was the leader of more than a billion Catholics but he lived simply and perhaps sending a message to nobodies that they too can be humble. Many ministers in Uganda never carry their handbags, there is always somebody at hand to do so. He refused to move in expensive limos or SUVs while visiting Kampala preferring a simple black Kia hatchback. Again, in a country where every public official craves for the most powerful vehicles. He lived simply and probably wanted us to learn something. Servant leadership. Showing off was not his way of life. He also understood that the Catholic Church needed reforms in a world that is rapidly changing. It may not have made him a lot of friends within the conservatives but leadership is about making key decisions including those that are unpopular. That way he endeared many to the church. He wanted a world where peace existed. He prayed for peace and welcomed everyone including many that he probably didn’t agree with. Perhaps if they listened to him, the world would have been different. There would be less destruction. We can all live together. He kissed the feet of warrying parties and urged them to embrace peace. Those whose feet he kissed only shook hands for a day and some are at each other’s throats again. He must have died wondering what needed to be done to stop the wars and killings that go on unabated sometimes fighting for no particular reasons apart from the egos of leaders and wealth that they would still leave on earth. Pope Francis still sent a message to those who deprive wealth of others by stating in his will his desire for a simple burial without the ornaments and all stuff that his position could afford. If he didn’t enjoy a luxurious lifestyle when alive, it would mean nothing to his body. There is a lot that we can learn from Pope Francis. His humility, ability to embrace everyone and putting others first even when it came at a personal cost. He didn’t adhere to the advice of his doctors for complete rest. He kept on meeting people and drove through the crowd in his papal mobile on Easter Sunday. And if leaders can take his example, the world would be a better place. Peaceful and resources shared with everyone. The writer is a communication and visibility consultant. djjuuko@gmail.com

Read More »