On March 19, 2023, MPs raised concerns about a proposed 15% fuel levy, warning it may increase the cost of goods. This levy aims to replace a fixed charge with a percentage-based structure. The proposal faces scrutiny over its economic impact, particularly on consumers and local production competitiveness.
On March 19, 2023, Members of Parliament (MPs) expressed their concerns regarding a proposed 15% fuel levy by the government. They warned that this increase could raise the prices of goods and services, impacting consumers adversely. This proposal aims to modify the existing fuel levy framework, introducing an annual levy on motor vehicles and replacing the current fixed charge of Rwf115 per liter of fuel with a percentage-based levy on the cost, insurance, and freight (CIF) value of fuel imports.
Godfrey Kabera, Minister of State for National Treasury at MINECOFIN, defended the proposed change, stating that the unchanged fixed charge since 2016 has not aligned with the rising fuel prices and road maintenance costs. Kabera illustrated that the previous level represented 15% of petrol prices back in 2016, whereas the current stagnant levy does not reflect present market dynamics, thus necessitating an adjustment to mirror reality.
The government supports this levy by asserting it will garner additional funds to enhance road infrastructure, diminish traffic congestion, and provide sustainable funding for road upkeep. However, MP Jean Claude Ntezimana cautioned that this increase could negatively affect Rwanda’s competitive fuel pricing. He noted that the resultant hike in transport costs could ultimately burden consumers further.
Additionally, MP Beth Murora raised concerns about the potential disadvantage to locally produced goods, as higher levies might make domestic products less appealing compared to cheaper imports. She questioned how the new tax structure would prevent exacerbating this issue.
In response, Kabera reassured that the proposed levy would gradually increase fuel prices. If applied to current prices, the levy would only raise from Rwf115 to Rwf150 per liter, which amounts to a modest Rwf35 rise. He emphasized that road users should primarily shoulder road maintenance costs and mentioned that the government is prepared to implement measures to mitigate unexpected fuel price surges.
The bill is currently under parliamentary review as MPs seek further information regarding its effects on the economy and overall cost of living.
The proposed 15% fuel levy has prompted significant debate among Members of Parliament, with concerns centered around its potential impact on consumer prices, local goods competitiveness, and economic stability. While the government argues for necessary adjustments to align the levy with current market conditions, MPs have highlighted the risks associated with such increases. The outcome of this proposal remains uncertain as ongoing parliamentary scrutiny continues.
Original Source: www.newtimes.co.rw
