Tax Proposals in 2026/27 Budget Risk Squeezing Ugandan Taxpayers, Analyst Warns

Uganda’s government is pushing tax changes in the 2026/27 budget to boost domestic revenue to Shs44.4 trillion, up 19.3% from the previous year, amid public debt surging to Shs130.8 trillion. Tax Justice Alliance Uganda’s Aloysius Kittengo highlights that while some hikes target ‘sin taxes’ on betting, alcohol, and tobacco to curb social harms, others penalize compliant taxpayers.

The betting tax rises from 20% to 30% of stakes to tackle addiction, youth vulnerability, and crime. However, Kittengo opposes extending Bujagali’s tax holiday to 2032, estimating foregone revenue jumping from Shs99 billion to Shs115 billion.

Fuel excise duties on petrol and diesel would increase by Shs200 per litre to Shs1,750 and Shs1,430, respectively, exacerbating living costs amid geopolitical tensions. Cement tax doubling to Shs1,000 per 50kg bag could hinder efforts to build 300,000 housing units yearly against a 2.6 million deficit.

Motorcycle registration jumps from Shs200,000 to Shs500,000, ignoring 1.2 million riders and electric options. Sugar duty rises from Shs100 to Shs300 per kg, hitting SMEs producing bread and juices. Used clothing faces 30% CIF tax, despite local clothes being pricey.

Positive notes include progressive income tax, 6% withholding on entertainers’ gross income for better tracking, VAT threshold hike to Shs250 million easing small business burdens, and ministerial flexibility for mining inputs to spur investment.

Kittengo urges PAYE threshold revisions for more disposable income, case-by-case loss carry-forward taxes post-audit, and targeted plastic taxes on single-use items to fight pollution.

Source: Daily Monitor (Uganda)