The Ministry of Finance has proposed an increase in excise duty on cigarettes as part of efforts to generate additional revenue and address public health concerns associated with smoking.
While appearing before Parliament’s Finance Committee to discuss seven Tax Bills, Minister of State for Finance Henry Musasizi emphasized that the tax hike is necessary to align with inflation trends and discourage tobacco consumption.
“The excise duty on cigarettes in Uganda has not been adjusted since the Financial Year 2017-18, yet inflation has risen by 28.8% over the period,” Musasizi stated. “This modest increase in excise duty on cigarettes and beer is expected to generate an additional Shs19.40Bn.”
The minister revealed that health sector stakeholders have been pressuring the government to impose higher taxes on tobacco products as a strategy to reduce smoking-related health risks.
“We have also been under pressure from the health sector to increase the excise rates on tobacco products much higher to reduce the health-related risks,” Musasizi noted.
Defending the proposal, Musasizi stressed that increasing the tax on cigarettes would serve both economic and public health objectives.
By making cigarettes more expensive, the government hopes to discourage consumption while generating much-needed revenue.
“Increasing the duty will not only align with inflationary trends but also serve as a public health objective by discouraging tobacco consumption, which imposes significant health costs on the economy,” he explained.
The proposed tax amendments are part of the government’s broader strategy to boost domestic revenue collection and address economic challenges.
If approved, the tax increase is expected to contribute significantly to the country’s fiscal sustainability while promoting healthier lifestyles.
