A new bill seeks to introduce a levy aimed at creating a sustainable and equitable system for financing road maintenance, ensuring that the growing number of vehicles, including electric ones, contributes to the upkeep of the nation’s infrastructure. The was highlighted on Wednesday, March 19, by Godfrey Kabera, the Minister of State for National Treasury, as he explained the relevance of the draft law establishing a levy on petrol, gas oil and motor vehicles for road maintenance, in the Chamber of Deputies. The Chamber of Deputies approved the relevance of the bill. Speaker Gertrude Kazarwa said the bill will be scrutinised by a parliamentary committee before later being put to a vote in the plenary. Here's what you need to know about this proposed levy and its potential impact on Rwanda’s road transport sector: 1. Levy breakdown by vehicle category The proposed levy will apply to different vehicle categories, as follows: Cars and Jeeps: Rwf50,000 each Pick-ups, Microbuses, Minibuses, and Buses: Rwf100,000 each Trucks and Half-Trailers: Rwf120,000 each Trailers: Rwf150,000 each. 2. Vehicles exempted from road maintenance levy Government motor vehicles, motor vehicles for embassies and diplomats accredited to Rwanda, and motor vehicles of international organisations that signed agreements with Rwanda, are exempted from the road maintenance levy, as per the bill. 3. Addressing road maintenance fund deficit According to an explanatory note of the bill, the Road Maintenance Fund (RMF) currently faces a significant funding gap, which is projected to expand in light of the second phase of the National Strategy for Transformation (NST2) targets since through the five-year programme running from 2024 to 2025, the government has an ambition to transition to electric mobility to contribute to the target of reducing greenhouse gas emissions by 38 per cent. This, it indicated, renders the reliance on fuel levies to finance road maintenance unsustainable. Currently, petrol- and diesel-powered vehicles contribute to the road maintenance fund through a fixed charge of Rwf115 per litre of fuel. The new bill seeks to replace that charge with a percentage-based levy – 15 per cent – calculated on the cost, insurance, and freight (CIF) value of petrol and diesel imports. This means the total cost of the petroleum products including expenditure on their insurance and shipment into the country. ALSO READ: Inside surge in hybrid cars in Rwanda’s automotive market 4. Inclusion of electric vehicles in road maintenance funding Electric cars, which do not contribute to fuel levy revenues, are expected to become a larger portion of the vehicle market. As their market share increases, the funding for road maintenance will decrease, further exacerbating the funding gap. In response to this challenge, the government seeks to introduce a new levy – charged annually – on motor vehicles – including electric ones – for road maintenance. Kabera told lawmakers that the number of vehicles is increasing, especially those that do not contribute to levy collection for road maintenance purposes, such as electric vehicles. Yet, he said, the country needs to get more funds for construction of new roads and maintenance of the existing ones to improve its transport sector. “We realise it is better that the funds that help in road maintenance come from the vehicles that use them, rather than being collected from citizens,” Kabera told MPs.
