Proposed sugar tax: Poor to bear brunt of higher costs

A woman collects sugar from a sugar bowl. Sugar price increments usually have effects on other products where sugar is the major input. PHOTO BY RACHEL MABALA

What you need to know:

Previously, slight increments in taxes, such as the one proposed, have resulted in higher price increments than the actual increments in taxation. Mark Keith Muhumuza spoke to manufacturers who said any increment in the taxation of sugar produced in Uganda would lead to an influx of “cheap” sugar imports from Brazil, which would in turn affect many producers in the country.

Government’s proposal to increase taxation on sugar is being met by stiff opposition from the sugar manufacturers and the civil society. In the Excise Duty (amendment) Bill 2016, the government is proposing an increment of taxation on beet sugar and cane from Shs50 to Shs100. This is an increment of about 100 per cent. Beet sugar and cane are some of the inputs used in the sugar production process. The tax will be imposed on each kilogramme of the final product: Sugar.
Uganda Sugar Manufacturers Association (USMA) has already written a protest letter to the Uganda Manufacturers Association (UMA) and the Private Sector Foundation Uganda (PSFU) warning that this will have consequences on the costs of production and consumer prices.

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