Rethinking ban on importing used cars

Regarding the environmental levy, vehicles which are five years old  but do not exceed eight years from the date of manufacture excluding goods vehicles, would be expected to pay 35% of  the  price quoted by a seller including all other charges as deemed by the seller.

A 50% fee will be charged on vehicles which are more than eight years old or more from the date of manufacture whereas vehicles that are five years and more, but are designed to carry goods will pay 20% of the price quoted by the seller as an environmental fee.

This development comes after the East African Community Heads of State resolved recently to reduce the importation of second-hand cars as a way of developing the regional automotive industry and create jobs.

In East Africa, Kenya and Rwanda no longer allow imports of cars that are over eight and 10 years, respectively, from their year of manufacture.

Moving forward, Malik Azhar, the former chairman of Used Cars Dealers Association Uganda Limited told The Independent in an interview on May 7 that the government should rethink its move of banning imports of cars older than eight years.

“They should do it in a phased approach,” he said adding, “cars of 20 years old should be let into the country for the next five years starting with the new financial year before putting a ban on their imports.”
Then, the ban would be placed on those aged 15 years and above in 2027/2028 and later in 2032/2033, government would allow importation of those cars that are 10 years old from their year of manufacturing.

Malik says banning importation of these cars would make buying cars expensive for Ugandans but also kill thousands of jobs.

“You don’t want to see crime increasing because people have no jobs,” Malik said adding, “Government will also lose tax.”

Bill in final stages

Malik’s views are in response to the ongoing drafting of The Traffic and Road Safety Act, 1998 (Amendment) Bill 2018 seconded by The Ministry of Works and Transport and Finance Planning and Economic Development.

According to Henry Musasizi, the chairperson of the Finance Committee in Parliament, the Bill will be ready before May 18 for Parliament to debate before its official implementation starts on July 1, 2018.
Musasizi refused to share new highlights in the draft but told The Independent on May 7 to wait for it.

Quick facts

50,000: Number of used vehicles imported into Uganda annually – 10% fall within the 8-year bracket
Shs180bn: Amount in taxes that government will lose annually
11,000: Number of people directly employed by car dealers
95%: Percentage of companies likely to close over new amendment