Government to ban importation of used cars
The traffic and road safety act 1998 Amendment bill to ban the importation of motor vehicles older than 8 years since their year of manufacture, will be tabled in parliament. Currently, figures from the Uganda Revenue Authority indicate that on average, 4000 cars are imported monthly into the country. Under current laws, cars older than 5 and 8 years are subject to an environmental levy of 35% and 50% respectively. This is aimed at reducing the carbon emissions from cars on our roads.
If the bill is passed, the impacts shall be felt all across the population in many ways.
The new law shall push car ownership beyond the reach of majority of the population who can only afford to purchase second hand cars because they are cheaper in comparison to the new ones.
The Uganda Revenue Authority shall also experience a decline in revenue since tax on motor vehicles is one of its leading sources of revenue.
On average, a two liter engine Sedan imported from Japan costs about USD2,000, insurance and freight (CIF) add on taxes averaging around USD1,500 and one is able to own a car at USD3,500. On average, a brand new Sedan of the same engine capacity retails at about USD20,000 depending on the brand of the vehicle.
The transport industry in Uganda heavily relies on second hand imported vehicles. Majority of public service vehicles are Toyota Hiace vans manufactured over 15 years ago. These are brought in as cargo vans with no seating arrangement. The seats are fabricated locally. According to beforward.jp, a vehicle trading website, the vans average at a CIF of USD5,000, a price affordable to most owners and would be owners. The newer models shall create a barrier to entry to new players in the industry. This might cause an increase in general traffic fares even in industries like tourism, most tour companies rely on private contractors who operate fleets of older model cars. A favorite of this sector is the Toyota Hiace Super Custom van due to its spaciousness, comfort and affordable running costs.
A vacuum of technical personnel who understand the mechanics of newer model cars to adequately service and maintain cars. The laws of demand and supply currently have dictated a supply of mechanics who are knowledgeable in older model cars than newer ones due to majority of the cars being over 10 years old. These cars are less complicated due to the absence of complex electronic systems. Newer cars require knowledge in computerized motor vehicle diagnostics since they are laden with modern gizmos and technologies. Most of the training institutions are yet to catch up with this new technology let alone most of the mechanics who are self-taught or informally trained.
This law shall not affect cars already in transit or in bonded warehouses. However, car traders have requested government to implement this law in phases. According to Marvin Ayebale, the Secretary General of Associated Motor Dealers, they support government’s plan based on the intentions, but they suggest a different method of implementation: initially banning cars older than 15 years and gradually reduce to the required 8 years over a period of time. They also suggest the law takes effect July 1, 2019 instead of this year. This they say shall help their customers to gradually cope with the change in prices. The bill also exempts several specialist vehicles such as tow trucks, cranes, fire fighting vehicles, tankers, mobile workshop and bullion vans among others
How can the public be cushioned from the effects of these amendments?
In the short term, government should slash the taxes on newer cars so that it is more viable to buy newer cars than older cars despite their CIF being higher than the older models. Manufactures should be encouraged to set up assembly plants in Uganda. This will give access to the Ugandan market new cars at cheaper prices eliminating the cost of freight. In Kenya, Volkswagen and Toyota assemble cars for the local market which are sold at significantly low prices. This will also boost the manufacturing sector in Uganda, many skills shall be imparted to the local human resource. Also cars shall be made according to specific local requirements such as higher ground clearance to combat our rough pot hole riddled roads.
In the long run, investment in efficient public transport means should be undertaken to provide a comfortable and convenient alternative to personal vehicle ownership. In more developed countries, trains and buses provide alternatives to private ownership of cars. In other countries with relatively flat topographies, bicycles are used, for example in Denmark.