economy 12 June 2026 Nile Post
Uganda's 2026/27 Budget: Wage Bill Surges to Sh9.7 Trillion, PAYE Relief for Low Earners
The Ugandan government has allocated Sh9.7 trillion towards its wage bill for the 2026/27 fiscal year, a significant increase aimed at enhancing salaries for public servants, particularly in education, health, and security sectors. This budget also introduces tax relief for low-income earners while increasing excise duties on various consumer goods. Source: https://nilepost.co.ug/news/348292/government-raises-wage-bill-to-shs97-trillion-in-202627-budget
Uganda’s national budget for the 2026/27 financial year, totaling Sh84.4 trillion, will see a substantial increase in the government’s wage bill, reaching Sh9.7 trillion. This allocation represents a key spending priority and is an increase from the Sh8.57 trillion earmarked in the previous fiscal year.
The augmented wage bill is primarily intended to fund salary enhancements for crucial public sector employees, including teachers, healthcare workers, and security personnel. This move underscores the government’s commitment to investing in human capital and improving the remuneration for thousands of public servants.
In conjunction with the increased wage spending, the budget introduces significant reforms to the Pay As You Earn (PAYE) tax system. The monthly tax-free threshold has been raised from Shs235,000 to Shs335,000, a change expected to leave approximately Shs96 billion in the hands of low-income earners, thereby boosting their disposable income and spending power.
However, the budget also contains measures that may increase the cost of living for households. Excise duties have been raised on several common goods. Sugar prices are set to increase with a tripling of the excise duty to Shs300 per kilogram. Cooking oil and cooking fat will also see higher taxes, with duties doubling for oil to Shs400 per litre and a new Shs500 levy introduced for cooking fat. Construction materials like cement and lime, as well as locally manufactured and imported paints, will also face increased excise duties.
Further revenue-generating measures include a hike in the environmental levy on imported second-hand clothes from 15% to 30% and an increase in the betting tax from 20% to 30%. Excise duty on alcoholic beverages and spirits has also been revised upwards.
To support small and medium-sized enterprises, the annual VAT registration threshold has been doubled to Shs300 million, aimed at reducing compliance burdens. The 2026/27 budget seeks to balance increased public service compensation and targeted tax relief with measures to bolster domestic revenue collection.
Source: Nile Post