12 May 2013

Uganda: Pioneer Buses Saved From Hammer, Trains Coming

Pioneer Easy Buses will return to Kampala streets following a last minute intervention by President Yoweri Museveni. The president at the weekend supported a proposal halting the impending auction of the Pioneer Easy Buses fleet that is parked at Namboole.

He recommended that the company be allowed to pay the tax arrears in installments and added that he will support another proposal by KCCA to give Pioneer Buses exclusivity on particular routes to enable it maintain low fares for travelers.

According to a State House statement following a weekend meeting with transport service providers, Museveni expressed support for the proposal mooted by the transport ministry.

Museveni also directed the Ministry of transport and that of Finance and economic planning to immediately issue a license to RVR railways to transport passengers and ease the transport problem in the city.

The meeting was attended by security minister Muruli Mukasa and Kampala Capital City Authority executive director Jennifer Musisi. The meeting was also attended by Directors of the Pioneer Bus Company including John Masanda, Albert Muganga, Esther Tayebwa and Oliver Wolff a German Transport consultant.

The Uganda Revenue Authority (URA) was due to auction the buses to recover over sh8.5b arising from unpaid taxes.

"Why tax them in the first place? There is a problem with the government tax policy. If government wants to decongest the city, isn't it in public interest that people import buses tax free," he said.

In another proposal, he suggested the cancelling of Pioneer's debt as long as the company complies with the bus specifications for the city. He said the Ministry of Transport will handle the issue of jurisdiction of the buses into other local governments in the neighboring districts outside KCCA.

"Don't auction the buses, give them time to pay the taxes. If we can convince the EA countries on the tax exemption," Museveni said.

The tax law on buses and trucks is governed by EAC law regimes and Uganda will need to seek exemption of taxes on buses from Arusha especially if none of the neighbouring countries can supply the specifications of buses needed in Uganda.

The President said the buses are trying to solve the issue of congestion in the city by providing vehicles with wider bodies without many engines.

"We should not look at this as a tax measure rather as helping us solve a problem," he said.

The President was however against guaranteeing a loan for Pioneer Bus Company saying this is a problem, because if the company fails to pay, it becomes a public debt.

"What we would do is to create a fund from which you can borrow and pay back. But there is something wrong with guaranteeing a loan. Do it on your own so that you are efficient. If you are inefficient you go bankrupt," he said.

Pioneer Bus company accumulated a debt of Shs 8.5billion in tax arrears as a result of importation of 100 buses as exercise duty, import duty interest etc.

The company directors say they accumulated debts of up to Shs 14billion in loses because they were forced to operate before some concessions with KCCA were put in place. The company helped break a strike of taxi drivers who had held government and travelers at ransom over a row with KCCA by providing transportation together with RVR wagons popularly known as Kayoola.

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