On March 19, MPs expressed concerns about a proposed 15 percent fuel levy, which they fear may inflate consumer prices. The bill aims to replace a fixed Rwf115 per liter levy with a variable rate linked to import costs. Although government representatives argued for necessary revenue for road maintenance, concerns were raised about market competitiveness.
On March 19, Members of Parliament (MPs) expressed unease regarding a proposed 15 percent fuel levy by the government, citing concerns over the increased costs of goods and services for consumers. This proposal aims to modify the existing fuel levy framework by instituting an annual charge on motor vehicles. The bill intends to replace a fixed charge of Rwf115 per liter of fuel with a 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), defended the proposal, arguing that the longstanding fixed charge of Rwf115 per liter has failed to adjust with the rising fuel prices and road maintenance requirements. He noted, “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 promotes the additional revenue from the levy as necessary for enhancing road infrastructure, alleviating traffic congestion, and securing sustainable road maintenance funding. MP Jean Claude Ntezimana cautioned that an increase in the levy might threaten Rwanda’s traditionally competitive fuel pricing. He expressed concerns that this might escalate transport costs, ultimately impacting consumers adversely. “If this levy is increased while prices are already high, won’t that place an even greater financial strain on citizens?” he questioned.
MP Beth Murora also voiced worries, indicating that heightened fuel levies could render domestically produced goods less competitive against imported products. She noted, “There are already products sourced from abroad that arrive at lower prices than those produced domestically. How do we ensure that this tax does not further disadvantage locally made goods?”
Kabera reassured the MPs that any increase in the levy would be phased and should not drastically affect fuel prices. If applied to current rates, the levy would adjust from Rwf115 to Rwf150 per liter, an increment of merely Rwf35. He stressed that road users should bear the majority of road maintenance costs rather than burdening the wider public. Furthermore, he mentioned that the government is amenable to implementing mitigating strategies should there be an unforeseen surge in fuel prices. “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,” he stated. The bill currently remains under examination by the Parliament as MPs seek further insights into its potential economic ramifications and impact on the cost of living.
In summary, the proposed 15 percent fuel levy has raised significant concerns among MPs regarding its potential effects on consumer prices and the economy. Advocates argue it is necessary for maintaining road infrastructure and addressing rising fuel prices, while critics worry about regional competitiveness and pressure on consumers. The government intends for gradual implementation and emphasizes readiness to manage adverse price fluctuations, highlighting the ongoing need for dialogue as the legislation progresses through Parliament.
Original Source: www.newtimes.co.rw
