A section of youth have explained why tax increment on alcohol is long overdue in Uganda.
The youth on Wednesday appeared before the Parliament Committee on Finance to defend government’s proposal to increase tax on alcohol, arguing that this will reduce on its consumption rate and increase food production the country.
This is after State Minister for Planning, David Bahati told the committee on Tuesday that Government will introduce equivalent tax rates for ad valorem rates on spirits and wines and excise duty on opaque beer (Kibuku) to generate Shs5bn and Shs2.3bn on respectively.
The term ad valorem is derived from the Latin ad valentiam, meaning “to the value.” It is commonly applied to a tax imposed on the value of property.
The youth were led by Rogers Kasirye, the Executive Director of Uganda Youth Development Link. He was accompanied by Rogers Mutaawe.
Kasirye argued that despite Uganda being ranked highest in alcohol consumption, less revenue is being earned from the sector as compared to other countries in the region.
“Alcohol industries are the largest revenue producers according to the 2016 statistics where Rwanda collected 16% out of $8.37bn, Tanzania collected $47.43bn, Kenya collected 20% out of $70,529bn while Uganda collected 13% out of $25.53bn far lower than most sub-Saharan African countries,” Kasirye said.
Kasirye argued that there is a lot of revenue lost as a result of low percentage of taxes hence the need to align the tax regime to other East African countries.
On the call by local beer producing companies to have a reduction on the tax, Kasirye said that their call should not be adhered to since the production of beers has greatly affected food security in the country.
“This type of beer like Kibuku and Engule is interfering with the food production, cassava was the food granary; the reason why sometimes we have food shortage is because farmers are selling all the cassava and sugars to beer companies,” Kasirye noted.
Kasirye told committee members that government should not be taxing beers per se, but the alcohol content in the beer observing that sometimes the alcohol content indicated on the packaging doesn’t tally with what is contained in the bottle.
“We want government to make more revenue from alcohol like it is done in other countries in the region. There should be no tax exemptions and should include public health aspect when addressing alcohol,” he said.
According to estimates by the World Health Organization (WHO), there are 2 billion people worldwide who consume alcoholic beverages.
Uganda has previously been reported to have one of highest levels of alcohol consumption in the East African region, with an annual per capita alcohol consumption of 23.7 liters (WHO 2014 report).