Business
EAC countries propose taxes on air tickets
Publish Date: May 07, 2014
EAC countries propose taxes on air tickets
  • mail
  • img
newvision

By Moses Walubiri

The Council of Ministers under the East African Community (EAC) have proposed an imposition of a levy on air tickets purchased in the five member countries as part of a raft of measures tailored to raising revenue necessary to scale down the community’s donor dependency for its budget.

In the current financial year, the secretariat of the budding regional bloc, according to Minister of East African Affairs, Shem Bageine, is running on a budget of $135m (about sh338b) with 68% being donor funded.

Bageine on Tuesday told journalists at the Media Centre that “EAC has been deliberating on alternative mechanisms of financing to ensure timely remittance of funds to the Secretariat by the Partner States and to reduce donor dependency.”

Highlighting the key action points from last week’s 12th Extra Ordinary Summit in Arusha, Bageine revealed that the heads of states directed the Council of Ministers to “explore all possible avenues” on sustainable funding of the community and sublimit a report in November.

Another possible source of revenue under consideration is levying a percentage on the value of imports entering the region from outside the community.

However, this modality of funding has been received with apprehension, according to the Director East African Community Affairs, Lawrence Mujuni, with experts warning that such a mechanism would ultimately confer more powers to countries contributing more revenue.

 “The problem with imposing a flat import levy is that Kenya will contribute the largest chunk, followed by Tanzania, Uganda, Rwanda and Burundi in that order. There might be an attempt to turn financial contribution into influence at the Secretariat which would not be good,” Mujuni said.

Contribution of revenue accruing from import levy might correspond with the size of the economy of member countries.

One suggestion aimed at fostering an equal stake in the community is for member states to contribute 20% of the budget divided equally among member states, with the balance raised from imposing an import levy on goods outside the community.

Air transport is out of reach for majority of East Africans which might negatively affect the expected revenue from this sort of tax.

With limited air traffic in the region despite an upsurge of foreign interest in the region fuelled by tourism and brisk investment opportunities, policy honchos in the community will have to cast their tax nets wider as they seek to raise funds necessary to viably run community activities.

The community is currently in the process of institutional review with the aim of transforming its executive organ from the existing Secretariat to a Commission as the process towards integration gathers pace.

The resultant supportive institutional framework in form of a community Central Bank, Statistics Commission and Enforcement Commission, according to Bageine, will see an exponential increase in its financial requirements.

The heads of states at the Arusha summit directed the Council of ministers to expedite the process for political integration – the remaining pillar of the EAC integration.

The original EAC collapsed in 1976 with attempts to revive it picking steam in the early 2000.
 

The statements, comments, or opinions expressed through the use of New Vision Online are those of their respective authors, who are solely responsible for them, and do not necessarily represent the views held by the staff and management of New Vision Online.

New Vision Online reserves the right to moderate, publish or delete a post without warning or consultation with the author.Find out why we moderate comments. For any questions please contact digital@newvision.co.ug

  • mail
  • img
blog comments powered by Disqus
Also In This Section
Program to stimulate coffee production launched
COFFEE farmers are working out ways to lure a majority of youths back into growing the cash crop from the boda-boda business they have recently embraced...
Traders want ban on twisted iron bars delayed
HARDWARE traders in the Rwenzori region have asked Government to extend the deadline for the ban on sale of twisted iron bars for at least three more months...
Badagawa advises local businesses to emulate foreign counterparts
Gideon Badagawa, the executive director of the Private Sector Foundation of Uganda (PSFU) has advised businesses in Uganda to emulate the standards adhered to by foreign counterparts if they want share the same level of success....
Ugandan traders advised to go global
Charles Brewer, the managing director of DHL Express Sub-Saharan Africa has challenged Ugandan businesses to go global if they want to be sustainable in the long haul....
Emirates daily Dubai-Entebbe route starts in October
Emirates is set to upgrade its services to Uganda with the deployment of larger Boeing 777-200LR on the daily Dubai to Entebbe route from October 1, 2015....
Airtel becomes third largest mobile operator in the world
Bharti Airtel (“Airtel”), a leading telecommunications service provider with operations in 20 countries across South Asia and Africa, has become the third largest mobile operator in the world in terms of subscribers....
Do you think Ugandan graduates are the worst in the region?
Yes
No
Can't Say
follow us
subscribe to our news letter