Sh1.6 trillion lost in untaxed illicit alcohol – report
Onapito called for a more balanced approach to the taxation of the industry for it to have a positive ripple effect acro ...
Uganda lost over sh1.6 trillion in untaxed illicit alcohol that dominated the 2021 alcohol market by over 65%, according to a new report titled; Understanding and Sizing Illicit Alcohol Consumption in Uganda by Euro Monitor International, an independent provider of strategic market research.
Speaking at the launch of the report findings at Serena Hotel in Kampala on Wednesday, Onapito Ekomoloit, the Chairman Uganda Alcohol Industry Association, said the industry has been greatly affected by the thriving illicit alcohol trade which has made them carry the taxation burden amid regulatory measures that are not fairly distributed.
He said the scale of illicit alcohol is usually underestimated.
“Illicit alcohol currently makes up 65% of the total market volume. That means that the rest of the industry players make 35%, yet we are among the top ten taxpayers in the country due to heavy taxation imposed on our products,” he said.
Onapito called for a more balanced approach to the taxation of the industry for it to have a positive ripple effect across the entire value chain.
“We also request the government to make the digital tax stamps affordable so that it does not be a burden to the businesses despite the advantages it has brought to the industry. Currently, on some products DTS’s contribute more than 4% to the final price which is too high,” he added.
Juliana Kagwa, the Director of Corporate Relations at Uganda Breweries Limited noted that the consumption of illicit alcohol increased in 2021 as a result of the COVID-19 pandemic that resulted in the closure of formal bars and a decline in people’s incomes.
“The pandemic led to direct consumer alcohol delivery gaining pace from informal bar, street vendors or directly from homes to consumers. This raised the market size of illicit alcohol to over 1.5 million hectoliters in 2021 at 9.1% consumption annual growth,” she said.
David Bahati, the state minister for Finance, Planning and Economic Development expressed surprise at the amount of money the government was losing through what he called some lax and not strong laws on enforcement of the Enguli Act that prohibits the manufacture and consumption of Enguli if one does not have a license.
He said the government will revise and update the law regarding the production and sale of alcoholic drinks.
“The government is in process of amending the Industrial license Act to be able to track anyone irrespective of where they are producing from. We shall also introduce a code that can be used on smartphones to detect whether the product is illicit or not,” Bahati added.