Ugandans Face Higher Costs for Beer and Wine Amidst Tax Increase The Ugandan government’s recent decision to increase excise tax on alcoholic beverages has dealt a blow to consumers, particularly those who enjoy beer and wine. The tax hike, which took effect on July 1, 2023, has resulted in significant price increases for these popular libations. According to industry sources, the excise tax on beer has increased by 10%, while the tax on wine has gone up by 20%. This has forced manufacturers to pass on the additional costs to consumers in the form of higher retail prices. A survey of local supermarkets and bars revealed that the average price of a bottle of beer has increased by between 100 and 200 Ugandan Shillings (UGX), while the price of a glass of wine has gone up by 200-400 UGX. The tax increase has come as a shock to many Ugandans, who frequently enjoy beer and wine as part of social gatherings or as a way to unwind after a long day. For some, the higher costs may mean reconsidering their consumption habits. “I used to enjoy a beer with my friends on a regular basis, but the recent price increase has made it a bit too expensive,” said Joseph, a resident of Kampala. “I may have to cut back on my beer consumption or limit it to special occasions.” The tax increase has also sparked concerns within the hospitality industry. Bars and restaurants rely on alcohol sales to generate revenue, and the higher prices could negatively impact their bottom lines. “The tax increase is having a significant impact on our business,” said Patrick, the owner of a popular bar in Kampala. “We’re seeing a drop in sales, and customers are complaining about the higher prices.” The government has defended the tax increase, arguing that it is necessary to generate revenue for essential services such as education and healthcare. However, experts argue that the tax may be counterproductive and could lead to a decrease in overall tax revenue due to reduced consumption. As Ugandans grapple with the higher costs for beer and wine, it remains to be seen whether they will adjust their consumption habits or explore alternative alcoholic beverages. The long-term impact of the tax increase on the country’s alcohol industry is still uncertain.Taxes on Alcohol and Other CommoditiesTaxes on Alcohol and Other Commodities Finance Minister Matia Kasaija has announced tax increases for beer, wine, diesel, and other commodities in the 2024/25 financial year budget. * Powdered beer: 1,000 shillings per kilogram * Imported wine: Excise duty increased from 80% to 100% per liter * Diesel and petrol: 100 shillings per liter tax * Adhesives, grouts, white cement, and lime: Excise duty imposed, aligning them with cement tax treatment Mobile Money and Value-Added Tax (VAT) * Mobile money withdrawals: 0.5% excise tax, excluding agent banks and banking halls * Electric vehicles and charging infrastructure: Tax exemptions to encourage electric mobility * Employee gift tax: Taxable goods or services provided by employers will be subject to VAT Income Tax and Tax Holidays * Capital gains tax: Exemption for investors selling stakes in private equity or venture capital funds * Tax holidays: Granted to manufacturers of electric vehicles, motorcycles, batteries, and charging equipment, as well as developers of medical facilities Public Debt * Uganda’s total public debt: 93.38 trillion shillings * External debt: 55.37 trillion shillings * Domestic debt: 38.01 trillion shillings * Debt-to-GDP ratio: Expected to end at 47.9% this financial year, below the 52.4% threshold Additional Notes * A waiver of penalties and interest on outstanding arrears has been extended until June 2023 for payments made between July and December 2024. * A 10% withholding tax has been introduced on commissions paid to banking and fintech agents.Ugandans Brace for Higher Beverage Costs as Taxes Bite Consumers in Uganda are set to face increased expenditure on alcoholic beverages following a hike in excise duty taxes. The new tax measures, effective immediately, will result in a significant rise in the prices of beer, wine, and spirits. The tax increase, announced by the Uganda Revenue Authority (URA), aims to raise additional revenue for the government amid economic challenges. The authority has increased the excise duty on beer from 20% to 30%, while wine and spirits will see an increase from 30% to 40%. The beverage industry has expressed concern over the impact of the tax hike on businesses and consumers. Uganda Breweries Limited, the country’s largest brewer, has warned that the increase will lead to reduced sales and job losses. “The tax increase will make our products unaffordable for many of our consumers,” said Uganda Breweries Managing Director Mark Ocitti. “This will not only hurt our business but will also affect the livelihoods of our employees and suppliers.” Consumers are also dismayed by the prospect of higher beverage prices. “I already struggle to afford beer, and now it’s going to be even more expensive,” said John, a construction worker in Kampala. “It’s just not fair.” Experts believe that the tax increase could have adverse effects on the economy. Increased beverage prices may discourage consumption, leading to lower tax revenues in the long run. Additionally, it could fuel smuggling and illicit trade in alcohol, depriving the government of legitimate tax revenue. The URA has defended the tax increase, arguing that it is necessary to meet the government’s revenue targets. However, it has promised to monitor the impact of the measure and make adjustments if necessary.