In response to the skyrocketing commodity prices, President Yoweri Museveni has repeated the government won’t consider subsidising and removing taxes on fuel.
Museveni made the remarks on Friday during a televised address to the nation. This was his third address in a space of only two weeks. He said he was overheard many individuals demanding for subsidising but this is even dangerous.
“The question is, what can we do? Do we intensify dependency or disengage? Should we bleed ourselves white? When we had this big problem (rising commodity prices), the debate was that subsidize the petrol from outside countries and remove taxes. That one, we say no,” Museveni said.
Speaking in his earlier address last month, he said subsidies would mislead people to over buy and consume a particular item without economising which would in the end inflate the country.
“Me as a rebel, when I see this situation and I say, we must migrate to something else, not subside…Because when we subside, people will continue buying more and more. You will create an artificial comfort to the people for them to think things are normal when they aren’t normal and you do that by bleeding yourself,” Museveni said.
In addition, he said the subsidies will lead to the encroachment of the foreign reserves, which are $4b, and then create a situation similar to what is in Sri Lanka where the country’s foreign reserves dropped because they couldn’t import fuel and other necessities, prompting protests and the fall of the government.
Museveni suggested last month it is better to continue buying commodities expensively than facing a shortage. He said shortage of tax collection will also stall many development projects.
“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,” he added.