Consumers to pay more for beer, cigarettes as taxes increase

Kampala. Consumers will have to pay more for a bottle of beer and a stick of cigarette because Members of Parliament (MPs) upped the tax on the items on Wednesday.
The MPs say they care about people’s health and the country needs more money in the vaults.
During a debate on the Excise Duty Bill, the MPs, however, ensured that even with the increased taxes, the local manufacturers of the two leisure commodities are protected by setting taxes on their products a little lower than on the imported stuff.
“If we make the difference very small, you will find that people will opt for foreign goods. If we increase, it will also cut down the intake by the local people,” Budadiri West MP, Nandala Mafabi argued as he made a case for increased tax.
With effect from the next financial year, Shs55,000 will be paid per 1,000 sticks of locally manufactured soft cup cigarettes; a Shs5,000 more from the old charges. Also, Shs75,000 will be charged per 1,000 sticks of imported cigar rates.

Locally manufactured Hinge lid cigarettes will be taxed Shs80, 000 and the imported one will be taxed Shs100, 000 per 1,000 sticks.
Mubende woman MP, Namugwanya Bugembe Benny, unsuccessfully pushed for a blanket Shs80, 000 for all locally manufactured cigarettes as a deterrent for smokers.
“Tax should be bigger on imported products but I do not agree with the insinuation that tax on local products should be lower than Shs80,000.
“We are putting tax for revenue for tax revenue but also to discourage young people from consumption but also to help the old one. Leave Shs80,000 for local and Shs90,000 for imported,” she said.

Junior minister for Finance, David Bahati, said the ministry had not differentiated between imported and locally produced cigarette “because of the tobacco control act we passed which says that we should not differentiate cigarettes because a cigarette is a cigarette.”
On beer a product whose local raw material excluding water is 75 per cent by weight per litre, a tax 30 per cent or 650 per litre or whichever is higher was passed.
The other beers produced from locally produced material have been given a 60 per cent tax.
The House, however, rejected the House committee on finance’s proposals to lower the tax on non-alcoholic beverages excluding fruit or vegetable juices from 13 per cent to 10 per cent or Shs157.

Although the committee’s argument was that the 13 per cent rate is the highest in the region, minister Bahati argued that the move will see the country lose Shs32 billion.
Mr Amos Lugoolobi, the chair of the House Committee on Budget, rejected the 10 per cent proposal arguing that government should be given chance to collect enough money.
“Out of the Shs28.8 trillion budget, our discretionary resource is about Shs12 trillion. We are struggling to find resources and this is not the time to give away Shs32 billion. I am not in support of the idea of reducing tax on beverages,” he said.