Ugandans will have to continue paying higher prices for soft drinks if government does not rethink its move of increasing the exercise duty charged on the beverage sector.
Amos Nzei the executive chairman at Crown Beverages Limited said this week that the sector is struggling to remain relevant due to excessive taxes affecting their performance.
In the financial year 2017/2018 government increased excise duty paid by the beverage sector from 13% to 15% despite industry players’ requests to reduce it to 10%.
Beverage firms in Kenya and Tanzanian pay 7% and 5% as excise duty respectively.
In 2017 the sector grew by 8% a percentage that is relatively low to what was expected.
“Excise duty is affecting the sector. When we met with the president , he agreed with us [that the taxes were high] but to our surprise in the financial year 2017/2018 they just increased to 15%” Nzei said.
Nzeyi noted that the pinch is felt more by consumers in form of high prices for soft drinks.
In the financial year 2016/2017, Crown Beverages, the manufacturers of Peps, paid over Shs 75 billion in taxes.
“The minster of Finance promised that in 2018/2019 they will reduce the excise duty to the requested 10%. We are still waiting to see they implement what they promised,” Nzei said.
Paddy Bagakire the chief executive officer at Crown Beverages, said despite the challenges, the company is set to celebrate 25 years of operating in Uganda.