By Agaba Muzoora
Africa-Press – Uganda. I read with keen interest your New Vision article of January 20, 2026, where you indicated that the Ministry is working on tax policy reforms aimed at raising revenue without increasing tax rates. This is welcome news for those of us who believe sustainable development must be anchored in fair, progressive taxation that broadens the tax base while stimulating economic growth.
As your Ministry refines this policy, I wish to highlight a high-impact reform that warrants urgent attention: the removal of all import taxes on commercial transport vehicles, leaving only basic registration and number plate fees.
This proposal rests on a simple yet often overlooked economic reality — commercial transport vehicles are tools of production. Taxing them heavily is effectively taxing productive inputs, with consequences for the entire economy.
This reform is especially urgent in Uganda, where road transport dominates. Approximately 99% of goods and 95% of passenger movement rely on roads. Yet road transport is costly and inefficient in both time and price. Transport costs, therefore, are not a mere sectoral concern; they are a macroeconomic variable that affects prices, competitiveness, and overall welfare. Fiscal policy that raises or lowers transport costs transmits economy-wide effects.
High transport costs in Uganda stem from three interrelated factors:
First, the prohibitive cost of importing commercial vehicles. Excessive import duties, VAT, withholding tax, environmental levies, and other charges drive taxes on buses, taxis, trucks, and delivery vans to between 80% and 120% of their CIF value. In effect, an importer pays nearly twice for a single vehicle.
Second, these taxes make outright vehicle purchases impossible for most operators, forcing reliance on bank loans. Commercial vehicle loans, typically repaid over two to three years, carry effective interest rates of 120–200% over the loan period. These financing costs are passed on to passengers and businesses through higher fares and freight charges.
Third, high acquisition and financing costs limit the supply of commercial vehicles on the road. Restricted supply allows operators to charge higher fees while reducing mobility, weakening market integration, slowing the movement of labour and goods, and suppressing economic activity.
The result is a vicious cycle: high transport costs drive up prices of food, construction materials, and basic goods, fuel inflation, erode purchasing power, and undermine productivity. Even citizens who do not use public transport pay indirectly through higher costs. The economy slows, and poverty persists.
Transport is a foundational input across Uganda’s economy. Fiscal policy must align with this reality rather than work against it. Uganda’s industrialisation, urbanisation, regional trade, tourism, and private-sector-led growth ambitions cannot be achieved without affordable, reliable, and modern transport systems.
In a landlocked country with limited alternatives, commercial transport vehicles are capital goods essential to all economic activity. Taxing them heavily is equivalent to taxing productivity itself. Yet Uganda treats commercial transport vehicles like luxury private cars.
Removing import taxes on commercial transport vehicles would increase fleet numbers, reduce transport costs, stimulate competition, and generate broad economy-wide benefits through improved efficiency and mobility.
The prevalence of old, unsafe, noisy, and polluting vehicles is often blamed on poor maintenance or driver indiscipline. However, this ignores the economic reality: fleet renewal is financially punitive under current taxation, forcing operators to keep vehicles beyond their optimal life.
Removing import taxes would make fleet replacement affordable, accelerate adoption of safer, cleaner, fuel-efficient vehicles, and directly support government objectives on road safety, emissions, and noise control. It is contradictory to penalise operators for pollution while maintaining a tax regime that discourages compliant vehicles.
Concerns about potential revenue loss are understandable. While border taxes provide immediate collection, they suppress sector growth. Lower acquisition costs would expand the formal transport sector and generate sustainable revenue through fuel taxes, PAYE contributions, insurance, licensing, vehicle servicing, and spare parts.
Indirect taxes would also rise from expanded business activity enabled by lower transport costs and improved market access. The choice is not between revenue and reform, but between short-term collections and long-term economic expansion. Sustainable revenue comes from unleashing productivity, not penalising it.
Removing import taxes on commercial transport vehicles is therefore not a populist gesture but a rational, growth-enhancing reform. It offers the Ministry of Finance an opportunity to lower living costs, increase productivity, support private-sector growth, improve road safety, reduce pollution, and sustainably expand the tax base — all through a single targeted intervention.
