Govt ban on second hand cars hypocritical-audit firm

An international audit firm has scoffed at a plan by government to ban second hand vehicles above eight years, terming it as a hypocritical move.

The ban has raised wide public debate, with car dealers warning that if the ban is implemented, Ugandans will not afford to purchase vehicles.

Price Waterhouse Coopers notes that while government hinges its argument on the vehicle ban on protection of the environment, it shoots itself itself in the foot for failing to ban the use of plastic polythene bags, popularly know as kaveera.

Joseph Kamulegeya from Price Waterhouse Coopers explained that, “The objective for the ban is to protect the environment, however other environmental protection measures in the past such as the ban on plastic carrier bags which does more damage to the environment, agricultural farming land and livestock have failed to work.”

Kamulegeya also argued that Government should not forget the fact that due to limited disposable income and high cost of vehicles, second hand cars dominate Uganda’s motor vehicle retail sector and the East African nation is not the only one grappling with old cars.

The audit firm pointed out a research conducted on three African countries; Ethiopia, Kenya and Nigeria, where it was found that at least 80% of the imported vehicles (8 out of 10) are second hand used vehicles and the percentage in Uganda could be higher since the country has no local automotive manufacturing and assembling industry.

Although the Ministry of Finance projected that the proposed ban will result in tax loss to Government of Shs 182bn, Kamulegeya dismissed the figure, saying the revenue lost will be a lot more, considering the impact of the second hand vehicle business sector has on the economy.

The audit firm opined that if the issue is protection of the environment, how much pollution would a Toyota Vitz Model 2005 of engine capacity 900cc do to the environment, compared to a Toyota Land Cruiser Model 2010 of engine capacity 4500cc

Kamulegeya added that the Ministry of Finance fell short on providing research and survey that had been conducted with respect to assessing and quantifying the impact the proposed ban will have on the following sectors and sub sectors of the economy.

He also pointed out the motor insurance sector that accounts for more than 50% of the general insurance sector in motor vehicles, let alone the clearing agents, after sales supplies such as sale of spare parts, motor vehicle garages and servicing etc.

Kamulegeya warned against effecting the ban, instead proposing that the pre-import inspection of second hand vehicles is strengthened and strictly enforced.

Instead, PwC wants the environmental levy charged on old vehicles be amended in such a way as to discourage importation of very old vehicles and encourage importation of newer vehicles.

Yet still, the auditors are also proposing that fees charged on the first registration of imported vehicles should be increased from the current one million shillings to Shs 2 million, as opposed to the proposed increase to Shs 1.5 million.