The Independent Uganda: You get the Truth we Pay the Price
Kampala, Uganda | THE INDEPENDENT | Legislators on the Parliament Committee of Finance have expressed concern over proposed increase of taxes on cigarettes saying they will hit hard tobacco farmers and companies at a time everyone needs cushion to recover from coronavirus (COVID-19) crisis.
In the 2020/21 financial, Uganda proposes to increase excise duty on soft cap cigarettes from 55,000 Uganda shillings to 75,000 Uganda shillings per 1000 sticks.
The government would and on hinge lid cigarettes tax will increase from Shs 80,000 to Shs 120,000 per 1000 sticks.
Excise duty is an indirect tax on a product intended to discourage people from taking it by paying more for it.
These charges are still below the Uganda National Health Consumers’ Organization recommendation of 250,000 ($66) per 1000 sticks of cigarettes as a way to discourage its intake on health grounds.
Also Uganda will tax unprocessed and processed tobacco leaf designated for export. Here, a levy of USD 0.80 (Shs 3,016) per kilogram is proposed on the export.
Parliamentarians wrote in a report to be debated this week, “the new taxes may force manufacturers to lower the price of tobacco from the farmers hence reducing their earnings.”
They add that “this will also affect the operations of tobacco factories as the economy recovers from the COVID-19 pandemic. The current rates on cigarettes should be maintained to enable recovery of the sector.”
The new figures will rhyme with the rates charged on imported cigarettes. The imported hinge lid cigarettes have been paying 100,000 per 1000 sticks but now will move to Shs 120,000.
However, the new taxes will be similar because a court ruling in the East African Court of Justice classifying cigarettes from East African states and classifying them as imports and charging them different rates was discriminatory.
The parliament report says the ruling negatively affected Leaf Tobacco & Commodities Uganda Limited, which buys tobacco from farmers and manufactures domestically.
Parliament report says “operating in Uganda has been penalized by flattening of the excise duty rate for both cigarette importers and local manufactures whereas in other East African Countries like Burundi and Tanzania the rates continue to be differentiated.”
“There is need to differentiate the excise duty for cigarettes manufactured from here and those imported,” the MPs wrote.
The proposed taxes will be debated and passed or rejected this week.
*****
URN
