Consumers of alcohol and cigarettes are set to spend more come July1, 2017 when the 2017/18 budget takes effect after Parliament Okayed government proposals to increase taxes on the said items.
According to the Excise Duty Amendment Bill 2017 that was tabled by the Ministry of Finance, Planning and Economic Development for Parliament scrutiny on Wednesday ahead of the 2017/18 National Budget reading, the taxes will largely affect imported beer and wine.
According to the amendments, 60% increase on malt beer was upheld by the lawmakers while beer with 75% local material content will attract a tax of Shs600 as opposed to Shs700 as earlier proposed.
However, Parliament scraped off Shs500 tax on spirits from locally made materials, but retained the 60% tax increment on the said item.
However, David Bahati, the State Minister for Planning tried to oppose the removal of Shs500 tax per litre on locally manufactured spirits, noting that Government will lose Shs32bn in tax revenue.
Additionally, beer made from barley grown and malted in Uganda will attract a 30% (Shs950) tax increment if the amendment is upheld.
Government’s proposal to introduce taxes non-alcohol drinks also received Parliament’s support.
Government wants non-alcoholic juice apart from fruit or vegetable juice get a 13% or Shs240 tax increment per litre.
However, the Parliamentary Finance Committee report recommended an increment of 10%/ Shs157 per litre, noting that Uganda has the highest
Excise Duty tax on soda within the East African Community, with that of Kenya’s at 7% while Tanzania’s at 5%.
However, Sarah Opendi, the State Minister of Health, General Duties opposed the recommendation to reduce the increment to 10%.
“I am not in favour of reducing the tax from 13% to 10%. I know how the bottles in Kenya look. It is not true they smuggle because of low taxes. Let us maintain tax as proposed. We have so many unfunded priorities next year,” she argued, with support from Jane Ruth Aceng, the Health Minister.
However, taxes on confectionaries are set to be scrapped off.
Relatedly, legislators Okayed plans by Government to increase taxes on cigarettes in the 2017/18 national budget.
Bahati told MPs that Government collected Shs19bn following the recent increment of taxes on cigarettes.
Government had proposed to increase taxes on cigarettes (soft cap) to Shs50, 000 on each 1000 locally manufactured cigar sticks and Shs55, 000 on 1000 imported sticks.
However, after a heated debate, Parliament agreed to have taxes amended to Shs80, 000 on locally made cigars and Shs100, 000 on imported cigars, per 100 sticks.