Tax reliefs would make people feel comfortable when they are not, says Museveni

President Museveni has reiterated his earlier stance regarding the high fuel prices saying it would be suicidal for government to slash taxes as a measure to curb escalating prices of essential commodities in the country.

“When you subsidise, you mislead people to think that there is plenty and they fail to economise what they have, in the long run, you deplete your reserves. This pressure to use the little money we have to subsidise problems, we would rather use it to get out of problems that we have. That will make people feel comfortable when they are not,” Museveni said.

The president was on Wednesday addressing the nation on the state of affairs.

There have been repeated calls by various stakeholders to government urging the need to offer tax reliefs and subsidize essential commodities to allow Ugandans get out of the current situation of inflation.

Speaking on Wednesday, the president explained that the current situation is one of high prices and not scarcity, noting that the idea of tax cuts and subsidies is only suicidal that government will not attempt to do.

“There is a difference between high prices and a shortage of commodities, so which is better? In this situation, the biggest challenge is that we can no longer have plenty. Taxes are meant for development. We want to build new roads and other projects and when we cut taxes or subsidize commodities, the projects are stopped and money is taken for eating and buying fuel to drive cars,” Museveni said.

He said that such false hope to the population is what has caused problems to the establishment in Sri Lanka, a country he said is fairly developed.

“If you subsidize or cut taxes, you mislead people. They get used and stop living within their means and in the end you may transform high prices into total shortage. Like Sri Lanka; that country is fairly developed but because of some mistakes, they are now in trouble.”

The Ministry of Finance Permanent , Ramathan Ggoobi recently said the only out of the current inflation problem is to reduce on the spending, rather than inducing tax reliefs and subsidies.

To this, he said government has taken the lead by slashing its public expenditure by six percent for the first quarter of the financial year 2022/2023 .

He also commented on the issue of high fuel prices that have pushed vehicles off the road.

“I always see on social media people say traffic has reduced but that is what is supposed to happen during inflation. If you see many vehicles on the road during inflation, you are in trouble,”Ggoobi said.

Alternatives for fuel

The president said that as part of efforts to conserve the environment, it is high time the country, just like the entire world, gradually moves away from the use of fuel for vehicles to other alternatives like electric cars.

“We should plan for electric cars. It is something we should go for. We made the Kira EV bus. Engineers have told me need shs20 billion to manufacture more. Instead of spending on subsiding mistakes, we would rather use it to get out of mistakes,”Museveni urged.

“Electric vehicles are cleaner; don’t have pollution, cheaper and less maintenance costs. This pressure to spend little money we have on problems, we would rather use it to get out of problems permanently. The long term solution is the electric car and trains.”