Members of Parliament (MPs) on Wednesday, March 19, raised concerns over the government's proposal to introduce a 15 percent fuel levy, warning that it could drive up the cost of goods and services for consumers.
The proposal is part of a draft law aimed at expanding the existing fuel levy framework by introducing an annual levy on motor vehicles.
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The bill seeks to replace the current fixed charge of Rwf115 per litre of fuel with a percentage-based levy calculated on the cost, insurance, and freight (CIF) value of petrol and diesel imports.
Godfrey Kabera, Minister of State for National Treasury at the Ministry of Finance and Economic Planning (MINECOFIN), defended the proposal, stating that the fixed Rwf115 levy--unchanged since 2016--has not kept pace with rising fuel prices and increasing road maintenance needs.
"This levy accounted for 15 percent of the price of petrol in 2016, but fuel prices have since increased, while the levy remained unchanged. The proposed adjustment ensures the levy reflects current market realities," Kabera explained.
The government argues that additional revenue from the levy will support road infrastructure improvements, reduce traffic congestion, and ensure sustainable funding for road maintenance.
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MP Jean Claude Ntezimana cautioned that raising the levy could undermine Rwanda's competitive fuel pricing, which has traditionally been kept relatively low despite the country's landlocked status.
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He warned that the increase could have a ripple effect on transport costs, ultimately burdening consumers.
"If this levy is increased while prices are already high, won't that place an even greater financial strain on citizens?" he questioned.
MP Beth Murora echoed similar concerns, highlighting that higher fuel levies could make locally produced goods less competitive compared to imported alternatives.
"There are already products sourced from abroad that arrive at lower prices than those produced domestically. How do we ensure that this tax does not further disadvantage locally made goods?" she asked.
Kabera reassured MPs that the levy increase would be gradual and would not significantly impact fuel prices. He noted that if applied to current prices, the levy would rise from Rwf115 to Rwf150 per litre--an increase of just Rwf35.
He further emphasised that road users should primarily contribute to road maintenance rather than shifting the cost to the general population. Additionally, he said the government is prepared to introduce mitigating measures should fuel prices spike unexpectedly.
"We recognize the need to balance revenue generation with economic stability. If fuel prices rise too sharply, the government can step in with interventions to prevent excessive price hikes," he stated.
The bill remains under parliamentary scrutiny as MPs seek further clarity on its potential impact on the economy and cost of living.
