Uganda's New Tax on Older Imported Cars Sparks Debate on Costs and Pollution

Uganda’s car importers and buyers face higher costs as the government plans to tighten rules on used vehicle imports for the 2026/27 financial year. The key change lowers the allowable age limit from 15 to 13 years, with a 50% environmental levy applied to any cars exceeding that age.

This policy targets reducing carbon emissions and improving air quality in cities like Kampala, where older vehicles contribute heavily to pollution exceeding WHO limits. Officials hope it encourages newer, cleaner imports.

Dealers predict sharp price hikes. Hajji Mustapah Ssemulindde of Ssemu Motors estimates a basic saloon car could rise from Shs20 million to Shs35-45 million, sidelining many first-time buyers. Uganda imports over 5,000 cars monthly, mostly used models averaging $7,000 (Shs26 million), but new levies could push costs to $12,000-$16,000.

Gilbert Wavamunno of Spear Motors welcomes the shift, saying it removes polluting old cars and supports pushes for electric vehicle incentives. However, Paul Bazibwe of Victoria Motors cautions that pricier used cars may slow sales, prompting people to keep old vehicles longer or opt for new ones with warranties.

Budget analyst Kenneth Asiimwe highlights affordability challenges, noting over half of Ugandans earn under Shs200,000 monthly and 85% of imports are used. He urges better public transport as an alternative. Climate advocate John Robert Turyakira applauds the levy for tackling dangerous emissions and health risks from poor air quality.

The measures build on 2018 tax changes, balancing revenue, environment, and economic impacts amid low per capita GDP of $1,206.

Source: Daily Monitor