As boda boda riders weave through Kampala’s traffic and households juggle rising food and transport costs across the country, Uganda’s latest tax proposals are sharpening a familiar anxiety: how much more will ordinary citizens pay, and what will they get in return?
Government is finalising a range of Revenue Enhancement and Compliance Measures for FY2026/27, targeting an additional Shs4.8 trillion, with UGX2.3 trillion from new policy measures and the rest from improved compliance by the Uganda Revenue Authority (URA).
The proposals come as Uganda seeks to reduce reliance on borrowing and boost domestic revenue under the Public Finance Management Act, 2015. But they are already stirring debate over fairness, economic impact, and public trust.
Key proposals include raising Pay-As-You-Earn (PAYE) to 40 percent for incomes above UGX 10 million (from 30 percent); increasing the tax-free threshold from UGX235,000 to UGX335,000; increasing fuel excise duty by UGX200 per litre; tripling sugar excise duty from UGX100 to UGX300 per kilogram; expanding taxes on property transfers, capital gains, and selected consumer goods.
Finance State Minister Henry Musasizi says the reforms are necessary to sustain government spending, noting that the 2026/27 budget is projected at UGX84.209 trillion, with UGX44.5 trillion expected from tax revenue.
While some measures target high-income earners, analysts warn that consumption taxes could have the widest impact. Kira Municipality MP Ibrahim Ssemujju Nganda says indirect taxes often go unnoticed, but hit hardest.
“For every litre of petrol, the government already charges between Shs1,350 and Shs1,550; the passenger ultimately pays,” he said.
Uganda’s tax base remains narrow. Of about 5.2 million registered taxpayers, only 2.5 million are active, with roughly one million salaried workers contributing through PAYE. “When people see deductions on their payslips, that is when the pain becomes real,” Ssemujju said, warning that higher PAYE could significantly reduce disposable income.
Amolatar Woman MP Agnes Atim Apea agrees taxation is necessary but says the debate must shift to equity and economic impact.“Our tax-to-GDP ratio is still about 13–14%, which is low. But we must ask: who are we taxing, and at what cost to livelihoods and businesses?” she said.
She also raised concerns about tax exemptions, arguing they often favour larger or foreign firms, leaving local businesses disadvantaged.
Civil society groups warn that raising taxes on fuel and basic commodities could trigger broader price increases.
David Kizito of Transparency International Uganda cautioned that some proposals appear poorly timed. “Increasing fuel taxes during global supply disruptions will raise pump prices,” he said. “In a liberalised market, government cannot control the final cost.”
Higher excise duties on goods like sugar, he added, risk worsening the burden on low-income households. Beyond tax rates, public concern is increasingly focused on how tax revenues are used.
Ssemujju points to rising recurrent expenditure, citing billions spent on administrative costs such as vehicles, fuel, and allowances, even as public services struggle.
“The issue is not just collecting taxes, it is whether taxpayers see value for money,” he said.
Many Ugandans say new taxes are coming at the wrong time. “The biggest pain is increasing taxes without tackling corruption or reducing government expenditure,” said Lillian Aber.
James Obed added: “Instead of lowering the cost of materials like cement, taxes are increasing while wastage continues.”
Others questioned whether leaders are insulated from the impact of the policies they pass, calling for spending cuts before new tax measures.
Uganda’s tax reforms, anchored in the Income Tax Act (Cap. 338) and Excise Duty Act, must still be debated and approved by Parliament. Economists note the proposals combine progressive elements (higher taxes on top earners) with regressive ones (consumption taxes affecting all households).
The World Bank has previously warned that four in five Ugandan businesses fail within five years, citing high taxation and cost of credit among key factors.
With public debt estimated at nearly UGX130 trillion and interest payments consuming a growing share of revenue, pressure to raise taxes is unlikely to ease.
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