Da Dona
Senior Member
- Dec 16, 2025
- 134
- 134
According to government revenue mobilisation targets, Uganda aims to collect 18% of its GDP, translating to approximately UGX 40 trillion annually from both direct and indirect taxes. However, questions persist about the efficiency and transparency of how these funds are utilised.(NTV Uganda)
A key proposal is an increase in excise duty on petrol and diesel by UGX 200 per litre. Currently, fuel prices average around UGX 5,300 per litre for petrol and UGX 4,800 for diesel.
Government projections indicate that this adjustment alone could generate approximately UGX 450 billion in additional revenue.
However, analysts warn of ripple effects across the economy, as fuel costs directly influence transport, production, and commodity prices.
Patrick Nsamba, MP for Kassanda North, highlighted global pressures already pushing prices upward:
“There is a war running in Iran where about 20% of global oil supply is affected… prices in Uganda have already risen by UGX 500 in less than 20 days, before you know it , government has added an extra of 200.”
He cautioned that adding taxes amid global price shocks and currency volatility could significantly burden consumers.
Despite these concerns, the government maintains that the tax increase will have a minimal impact on pump prices, arguing that market adjustments will absorb part of the shock.
The proposed reforms also target essential commodities. Excise duty on sugar is set to rise from UGX 100 to UGX 300 per kilogram—a threefold increase.
With retail sugar prices already ranging between UGX 4,900 and UGX 6,000 per kilogram, the adjustment is expected to push up the cost of everyday items such as tea, bread, and other baked goods—staples for many Ugandan households.
Income Tax Relief for Low Earners
In contrast, the government has proposed a major relief measure for low-income earners by revising the Pay As You Earn (PAYE) threshold from UGX 235,000 to UGX 335,000 per month—the first adjustment in over a decade.
Proposed monthly tax bands:
0 – 335,000: 0%
335,000 – 410,000: 20%
410,000 – 485,000: 25%
485,000 – 10,000,000: 30%
Above 10,000,000: 40%
This shift is expected to leave more disposable income in the hands of low-income workers, offering some cushion against rising living costs.
However, the reform will initially reduce government revenue by about UGX 96 billion in the first year. Government Officials argue that as economic activity expands, tax collections will eventually skyrocket.
Policy analysts have raised concerns over the design and timing of the proposals. David Kizito, a programmes officer at Transparency International Uganda, noted that some measures appear rushed and insufficiently researched, potentially undermining their intended outcomes.
The proposed measures are part of a broader government strategy to raise over UGX 2.3 trillion in additional revenue. Authorities argue that the tax changes are structured to target higher-income earners while maintaining macroeconomic stability.
Courtesy pic: Nile post Ug
A key proposal is an increase in excise duty on petrol and diesel by UGX 200 per litre. Currently, fuel prices average around UGX 5,300 per litre for petrol and UGX 4,800 for diesel.
Government projections indicate that this adjustment alone could generate approximately UGX 450 billion in additional revenue.
However, analysts warn of ripple effects across the economy, as fuel costs directly influence transport, production, and commodity prices.
Patrick Nsamba, MP for Kassanda North, highlighted global pressures already pushing prices upward:
“There is a war running in Iran where about 20% of global oil supply is affected… prices in Uganda have already risen by UGX 500 in less than 20 days, before you know it , government has added an extra of 200.”
He cautioned that adding taxes amid global price shocks and currency volatility could significantly burden consumers.
Despite these concerns, the government maintains that the tax increase will have a minimal impact on pump prices, arguing that market adjustments will absorb part of the shock.
The proposed reforms also target essential commodities. Excise duty on sugar is set to rise from UGX 100 to UGX 300 per kilogram—a threefold increase.
With retail sugar prices already ranging between UGX 4,900 and UGX 6,000 per kilogram, the adjustment is expected to push up the cost of everyday items such as tea, bread, and other baked goods—staples for many Ugandan households.
Income Tax Relief for Low Earners
In contrast, the government has proposed a major relief measure for low-income earners by revising the Pay As You Earn (PAYE) threshold from UGX 235,000 to UGX 335,000 per month—the first adjustment in over a decade.
Proposed monthly tax bands:
0 – 335,000: 0%
335,000 – 410,000: 20%
410,000 – 485,000: 25%
485,000 – 10,000,000: 30%
Above 10,000,000: 40%
This shift is expected to leave more disposable income in the hands of low-income workers, offering some cushion against rising living costs.
However, the reform will initially reduce government revenue by about UGX 96 billion in the first year. Government Officials argue that as economic activity expands, tax collections will eventually skyrocket.
Policy analysts have raised concerns over the design and timing of the proposals. David Kizito, a programmes officer at Transparency International Uganda, noted that some measures appear rushed and insufficiently researched, potentially undermining their intended outcomes.
The proposed measures are part of a broader government strategy to raise over UGX 2.3 trillion in additional revenue. Authorities argue that the tax changes are structured to target higher-income earners while maintaining macroeconomic stability.
Courtesy pic: Nile post Ug