Civil society call for fairer taxes as 2027/28 budget process begins

Kampala, Uganda | URN | Businesses and civil society organisations are calling for a broader and more equitable tax base as government begins preparations for the 2027/28 national budget.

They warn that continued increases in taxes on a narrow group of businesses and consumers could undermine economic activity and government revenue.

Kampala City Traders Association says some measures in the current budget, including the adjustment of the VAT threshold, have benefited traders, but argues that taxes on some imports remain too high.

Basha Baker, the Research, Policy and Advocacy Officer at KACITA-Uganda, says the garments trade is particularly affected by multiple taxes and levies, which he estimates can push the overall burden to about 80 percent.

Baker says government should listen more closely to businesses when designing tax measures, arguing that excessive taxation can drive traders out of business and ultimately reduce the revenue government collects.

He says the decision to retain higher taxes on some products should be applied consistently across sectors and not disproportionately affect particular groups of traders.

Baker says import trade remains important because local industries do not yet have the capacity to meet all domestic demand.

He says traders recognise that some of their proposals were reflected in the current budget, although more needs to be done in the next financial year.

The concerns were raised during a retreat organised by the Tax Justice Alliance Uganda, a coalition of about 60 civil society organisations advocating for equitable tax systems and improved domestic revenue mobilisation.

Civil society organisations argue that increasing domestic revenue is becoming increasingly important as international development assistance and concessional financing decline.

Sophie Nampewo Njuba, Finance for Development and Economic Justice Coordinator at Oxfam Uganda, says the need for government to collect more revenue should not be questioned, but taxation must be based on fairness.

She says every eligible taxpayer should contribute their fair share instead of the burden being concentrated on a limited number of taxpayers.

Nampewo calls for stronger cooperation between the Uganda Revenue Authority, local governments, professional associations and informal businesses to bring more economic activity into the tax system.

She also calls for lower taxes on essential services such as internet, mobile money, water and electricity, arguing that high taxes on these services ultimately increase costs for consumers and businesses.

Nampewo further questions tax exemptions enjoyed by some groups, including allowances paid to Members of Parliament and some security agencies, arguing that government should examine whether such exemptions remain justified.

Hebert Kafeero, Deputy Executive Director at SEATINI Uganda, says government should focus on bringing all eligible taxpayers into the tax system instead of continually increasing the burden on those who are already paying.

He says stronger domestic revenue mobilisation has become more urgent as international aid and concessional financing decline, warning that Uganda needs to raise more of its own resources to reduce the risk of excessive borrowing and debt distress.

Aloysius Kittengo, Programme Coordinator for Financing for Development at SEATINI Uganda, says civil society and expert consultations are increasingly influencing government policy.

He says about a quarter of their submissions were taken up in last year’s budget.

However, Kittengo says significant revenue continues to be lost through tax incentives that do not always generate the intended economic returns and weaknesses in tax administration.

He says strengthening tax administration should be a priority because it accounts for the largest share of government revenue compared with new tax measures.

The debate is now expected to intensify as the 2027/28 budget cycle gets underway.

The Ministry of Finance, Planning and Economic Development is expected to issue the first Budget Call Circular for the 2027/28 financial year by the end of September, formally starting preparations for the next national budget.

The circular provides guidelines to ministries, departments and local governments on how to prepare and submit their revenue and expenditure plans.

The process comes as the implementation of the current 2026/27 budget continues to generate debate over taxation, Parliament’s role in shaping fiscal policy and the balance between raising domestic revenue and protecting businesses and consumers from excessive tax burdens.

President Yoweri Museveni initially withheld assent to two tax amendment bills passed by Parliament.

One of the bills is the Income Tax (Amendment) Act, 2026, which sought to exempt land-based casinos from a 15 percent withholding tax on winnings.

The President also initially rejected the Excise Duty (Amendment) Act, 2026, which proposed increasing the excise duty on single-use plastics from 2.5 percent to 25 percent, or 1,500 US dollars per tonne, arguing that the increase was too steep.

The President later assented to the legislation, bringing the legislative cycle for the current budget to a close.

The government has to ensure that it raises sufficient domestic revenue to finance public services and development without imposing tax burdens that discourage investment, increase consumer prices or push businesses into informality.