Members of Parliament have raised concerns over a proposed 15 percent fuel levy, arguing it could increase consumer costs and affect the competitiveness of local goods. The proposed bill aims to transition from a fixed Rwf115 levy to a percentage-based framework while supporting road maintenance and infrastructure. MPs are actively seeking clarity on its economic impact as the bill undergoes parliamentary scrutiny.
Recently, Members of Parliament (MPs) expressed concerns over a proposed 15 percent fuel levy, which they caution could increase the cost of goods and services for consumers. This proposal, part of a draft law, aims to modify the existing fuel levy framework by implementing an annual levy on motor vehicles. The new bill seeks to replace the current fixed charge of Rwf115 per liter of fuel with a more dynamic percentage-based levy determined by the cost, insurance, and freight (CIF) value of petrol and diesel imports.
Godfrey Kabera, the Minister of State for National Treasury at the Ministry of Finance and Economic Planning (MINECOFIN), justified the proposal. He emphasized that the unchanged fixed Rwf115 levy since 2016 has failed to align with escalating fuel prices and increased road maintenance requirements. Kabera articulated, “This levy accounted for 15 percent of the price of petrol in 2016, but fuel prices have since increased, while the levy remained unchanged. The proposed adjustment ensures the levy reflects current market realities.”
The government maintains that the additional revenue from this levy would enhance road infrastructure, mitigate traffic congestion, and provide sustainable funding for road maintenance. However, MP Jean Claude Ntezimana expressed concerns that increasing the levy could harm Rwanda’s competitively priced fuel market. He alerted that such an increase might raise transport costs, indirectly straining consumers’ finances, saying, “If this levy is increased while prices are already high, won’t that place an even greater financial strain on citizens?”
Similarly, MP Beth Murora raised noteworthy points regarding the potential disadvantage locally produced goods might face due to higher fuel taxes compared to lower-priced imported products. She queried, “How do we ensure that this tax does not further disadvantage locally made goods?”
In response, Kabera assured the MPs that the increase would be gradual and modest. He mentioned that if applied to current fuel prices, the levy might only rise from Rwf115 to Rwf150 per liter, a total increase of Rwf35. He stressed the objective of ensuring road users contribute to road maintenance costs and reassured the parliament about the government’s readiness to introduce measures in the face of sudden fuel price surges, stating, “We recognize the need to balance revenue generation with economic stability. If fuel prices rise too sharply, the government can step in with interventions to prevent excessive price hikes.”
The bill is still under parliamentary review as MPs continue to assess its implications for the economy and the overall cost of living.
In summary, the proposed 15 percent fuel levy has generated significant discussions among Members of Parliament regarding its potential impact on consumer prices and the economy. While the government argues that the levy is necessary for maintaining and improving road infrastructure, concerns about increased costs for consumers and local goods competitiveness remain paramount. The proposal is subject to further scrutiny in parliament, reflecting the need for a balanced approach that considers economic stability alongside revenue generation.
Original Source: www.newtimes.co.rw
