The Ministry of Finance has proposed an increase in taxes on cigarettes and beer manufactured from local raw materials in an effort to generate an additional Shs19.40 billion.
The government argues that this move will not only boost revenue but also address health concerns associated with smoking.
The proposal was presented by Henry Musasizi, the Minister of State for Finance, while appearing before Parliament’s Finance Committee to discuss seven Tax Bills.
Musasizi emphasized that the increase in excise duty is necessary to reflect current economic conditions and inflation trends.
As part of the plan, the excise duty on beer manufactured from local raw materials will rise from the current Shs650 to Shs900.
“Modest increase in excise duty on cigarettes and beer to generate Shs19.40Bn. The primary objective of this amendment is to generate additional revenue while accounting for inflation, especially, on cigarettes. The excise duty on cigarettes in Uganda has not been adjusted since Financial Year 2017-18, yet inflation has risen by 28.8% over the period,” said Musasizi.
The minister also disclosed that the government has faced pressure from health sector stakeholders to increase the tax on tobacco products as a measure to curb smoking-related health risks.
“We have also been under pressure from the health sector to increase the excise rates on tobacco products much higher to reduce the health-related risks,” he explained.
Defending the government’s position, Musasizi stressed that increasing the excise duty on cigarettes and beer will not only help the government align taxation with inflation but also contribute to public health efforts by discouraging tobacco consumption.
“Increasing the duty will not only align with inflationary trends but also serve as a public health objective by discouraging tobacco consumption, which imposes significant health costs on the economy. To increase the excise duty on beer manufactured from local raw materials from Shs650 to Shs900 to reflect the current economic conditions and inflation. This will ensure that the taxation of beer remains fair and that government revenue keeps pace with the economic realities.”
The proposed tax amendments are part of broader government efforts to enhance domestic revenue collection and address economic challenges.
