What you need to know:
- The loss, the report noted, is worsened by the laxity in enforcement of existing laws that govern the production and sale of alcohol.
A report by Uganda Alcohol Industry Association has found that government loses approximately Shs1.6 trillion in unrealised taxes due to trade in illicit alcohol.
The loss, the report noted, is worsened by the laxity in enforcement of existing laws that govern the production and sale of alcohol.
Between 2017 and 2021, the report notes, the value of illicit alcoholic drinks increased to 18.3 per cent from $577.8m in 2017 to $956.8m in 2020.
During the period, total consumption of illicit alcohol increased by 9.1 per cent, due to growth in poverty and a lack of regulation.
Illicit alcohol is widely sold directly from private households, which are involved in the production, as well as consumption of these beverages.
According to the report, current penalties stipulated in the Act are not sufficient in curbing regular or new illicit players in the production, sales and smuggling of illicit alcoholic drinks.
The punishment imposed and paying of fines are considered worth the risk in illicit trading. This increase in consumption of illicit alcohol comes at a time when government banned alcohol in sachets, requiring use of bottles.
The report, titled “Understanding and Sizing Illicit Alcohol Consumption in Uganda” was released from a research that had been done by Euromonitor International, a leading independent provider of strategic market research for the past 40 years.
Speaking at the launch of the report, Mr Onapito Ekomoloit, the Uganda Alcohol Industry Association chairman, said as an industry, they are impacted by the thriving illicit alcohol trade, noting that they carry the burden of heavy taxation and regulatory measures that are not fairly distributed.
“The scale of illicit alcohol is often underestimated, making the formal sector an easy target of regulatory bodies. A disproportionate blame for alcohol related harm and the resultant punitive taxation regime. Illicit alcohol currently makes up 65 per cent of the total market volume,” he said.
Mr Onapito also commended government for introducing Digital Stamp Tax that have helped to control importation and sale of illicit spirits.