Civil Society Budget Advocacy Group (CSBAG) has expressed concern over the recent government tax proposals and price increases, warning that the timing and impact on citizens could be severe.
Speaking to Canary Mugume during Next Big Talk hosted by Next Radio on Thursday, CSBAG Executive Director Julius Mukunda said fuel prices, which have increased by Shs 200 per litre for both diesel and petrol, raise questions about government priorities.
"Government needs to collect taxes to finance its expenditure, but the question is to what extent you should tax without hurting consumption of goods and services. That’s the thin line," he said.
The government has also increased the first-time registration fee for motorcycles from Shs 200,000 to Shs 500,000, citing environmental concerns and the prevalence of the boda boda economy. Mukunda criticized the approach, noting that boda bodas remain a major source of employment. He argued that incentives for electric motorcycles would be more effective than hefty taxes on ordinary bikes.
"An electric motorbike is more expensive than a regular one, so there must be incentives to encourage people to choose electric options, rather than imposing heavy taxes on ordinary motorcycles," he said.
Mukunda further criticized recent tax proposals affecting essential goods, housing, and consumer products. He highlighted the 30% environmental levy on second-hand clothes, calling it a weak argument that does not tackle environmental degradation effectively.
On sugar, he noted that it is a key raw material for Uganda’s growing beverage industry, and excessive taxation could hurt production.
Housing affordability is also at risk, with planned increases in cement and fuel costs expected to raise building expenses significantly, especially for first-time buyers.
Mukunda emphasized the need for incentives to encourage digital financial services adoption, pointing out that bank requirements remain cumbersome and trust in banking institutions is low.
Earlier on Thursday, the State Minister for Finance, Planning and Economic Development, Henry Musasizi, presented eight new tax bills to Parliament’s Finance Committee, aiming to raise Shs 1.7 trillion in revenue. The proposals target a tax-to-GDP ratio of 20% in the medium term and 25% in the long term.
"The Bills are meant to raise revenue, foster compliance, and assist the Uganda Revenue Authority (URA) in its work. Revenue mobilization plays a critical role in financing government priorities for socio-economic transformation," Musasizi said.
Key proposals under Income Tax include giving taxpayers the option to pay rental income tax monthly, introducing a 10% withholding tax on commissions paid to data and voice bundle distribution agents, establishing an Alternative Minimum Tax of 0.5% for businesses carrying forward losses beyond seven years, introducing a 6% final withholding tax on non-business assets, and imposing a 6% withholding tax on public entertainers.
For VAT, the threshold will be increased from Shs 150 million to Shs 250 million to support small businesses, along with clarification on taxation of imported software.
Under Stamp Duty, land transfer duty will increase from 1.5% to 3%, while stamp duty on motor vehicle and motorcycle registration will be Shs 100,000 for regular vehicles, Shs 200,000 for commercial vehicles, and Shs 50,000 for motorcycles.
Excise Duty changes include increasing fuel (diesel and petrol) by Shs 200 per litre, doubling the excise on alcoholic spirits under 80% strength from Shs 1,700 per litre to Shs 3,500 per litre, raising motorcycle registration first-time duty from Shs 200,000 to Shs 500,000, extending excise to single-use plastics from 2.5% or USD 70 per ton to 25% or USD 1,500 per ton, doubling cement duty from Shs 500 to Shs 1,000 per 50 kg, tripling sugar duty from Shs 100 to Shs 300 per kg, introducing excise on cooking fat and fatty acids at Shs 500 per litre/kg, and doubling cooking oil duty from Shs 200 to Shs 400 per litre.
Amendments to the Traffic and Road Safety Act include reducing the acceptable car age from 15 to 13 years and introducing a graduated environmental levy on imported used motor vehicles.
Musasizi highlighted that these measures, alongside improved tax compliance strategies, are designed to expand the tax base by formalizing sectors currently outside the tax net.
The Finance Committee has received the proposals with mixed reactions, seeking more time to study their potential impacts on businesses and the public.