CSOs petition govt over reduction of taxes on tobacco, alcohol in 2025 budget

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Civil society organisations (CSOs) have expressed concern over the recent decision to cut taxes on alcohol and tobacco, saying it is likely to impact negatively on the country's health outcomes.

The CSOs said the undertaking will make alcohol cheaper thus increasing consumption, especially among young people and other vulnerable populations.

"We appeal to you (President Yoweri Museveni) to withhold assenting to the Excise Duty Amendment Bill 2024 recently passed by the Parliament of Uganda and to sanction a comprehensive review and revision of these tax changes with particular regard to alcohol and tobacco products," the group noted during a presser at Kolping Hotel in Bwaise, Kampala on Saturday, May 25.

According to the Bill which Parliament passed on May 16, 2024, the government is pushing to amend the Second Schedule to the Act, providing for a reduction of excise duty imposed on opaque beer from 20% or sh230 per litre or whichever is higher to 10% or sh150 per litre.

In a joint statement on Saturday, the group of four public health-oriented CSOs noted that the report of the Parliamentary Committee on Finance, Planning and Economic Development which is undertaking to slash a 10 percent tax on beer is suspicious,  considering the country has for years been grappling with a high disease burden resulting from alcohol use.

The group of CSOs included the Uganda National Health Consumers Organisation (UNHCO), Uganda Health Communication Alliance (UHCA), and Uganda Alcohol Policy Alliance (UAPA).

They said the committee has not provided for amending taxes on tobacco, which were last revised in 2020.

"Considering the empirical evidence on the negative social and health impact of alcohol and tobacco products, we recommend a 20% tax increase on their respective products (alcohol and tobacco products), " the group said.

Opaque beers

Opaque beers are locally sourced and manufactured beers using a low-cost industrial process. An example of opaque beer includes Chibuku, a local brew that was produced by Nile Breweries Limited (NBL) until 2018.
Parliament's justification for the tax reduction is that doing so would encourage the reopening of companies that had closed because of the higher tax.

Committee report

Committee chairperson,  Keefa Kiwanuka said recently that an unprogressive tax on opaque beer, for example, rendered Chibuku uncompetitive with local brews such as tonto,  malwa, and kwete on which the government was not collecting any taxes. As a result, about sh5b in Value Added Tax collections from the beer was lost.

Richard Baguma of Uganda Health Communication's Alliance addressing the media about taxes on Alcohol. (Photo by Margaret Zalwango)

But Richard Tinkasimire Baguma, the national coordinator of UHCA said increasing the taxes would not affect income for the government in the form of taxes from the products.

"Although raising taxes on alcohol and cigarettes will lead to price increases on these products their demand is likely not to be affected since the two products have inelastic trends. However, the increase in prices will in the long run prevent young people from initiating consumption of these addictive products. This approach therefore guarantees increased revenue," he said.

He said alcohol use among children and youth in Uganda is a growing public health concern, with several studies indicating a significant prevalence and associated risks.

He said the government should therefore be legislating to reduce consumption rather than encouraging it.

"Alcohol is associated with seven types of cancer which further raises the health burden on the economy, " he said.

Mable Kukunda Musinguzi, the programs manager of UNHCO, said over 15% of boys and 13% of girls aged 13-15 years start smoking annually.

Citing figures from the World Health Organization, she added that an estimated 204 Ugandans are killed by tobacco kills 204 Ugandans weekly.

"This is more than HIV, tuberculosis, malaria, accidents, and crime put together, " she said.

Margaret Nassanga of UAPA said the latest development contravenes Uganda's international commitments on alcohol and tobacco.