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
Dr Maggie Kigozi: Obstacles in businesses are jewels
Dr Maggie Kigozi, director Crown Beverages Ltd has challenged the youth to consider obstacles in starting and running businesses as opportunities to create better lives....
How to widen Uganda’s tax base in a large subsistence economy
Uganda’s tax base remains small and the country is grappling with measures on how to widen the tax base in light of decreasing donor funds and pressures to finance the national budget....
UAE Exchange Uganda observed World Food Day
UAE Exchange, the leading global remittance, foreign exchange and payment solutions brand observed World Food Day on 16th October. This year the theme was Family Farming: “Feeding the world, caring for the earth”...
Nigerian cleric warns Uganda over oil curse
Rev Father Edward Obi, a leading civil society activists fighting against the effects of the oil curse in Nigeria has warned Uganda that since oil has been discovered Ugandans are not safe from the negative effects the resource brings....
Oil to spur capital markets – Nsamba
This year marks 18 years since the Capital Markets Authority (CMA) was formed....
UBOS releases Producer Price Index
THE indices for hotels and restaurants indicate that annual prices for hotel services fell by 2.5 percent during the period of April, May and June 2014, compared to the same period in 2013...
Should the absence of bride price prevent couples from wedding?
Yes
No
Can't Say
follow us
subscribe to our news letter