The Ugandan government has unveiled a series of tough tax proposals aimed at raising an additional Shs4.8 trillion in revenue for the 2026/2027 financial year, as part of broader efforts to boost domestic collections toward a projected Shs40 trillion target amid economic pressures and fiscal needs.
The Revenue Enhancement and Compliance Measures outline reforms that will hit everyday Ugandans hard, particularly through higher PAYE on high earners, increased excise duties on fuel and sugar, and other adjustments. Finance Ministry officials say the measures—split between tax policy changes (Shs2.3 trillion) and URA administrative improvements—will help fund national priorities while curbing reliance on borrowing.
Key Proposed Tax Hikes:
- Salaries and Income Tax: High-income earners face the biggest bite. Salaries exceeding Shs10 million per month will now attract a 40% PAYE rate, up from the current 30%. This targets top earners and is projected to generate around Shs410 billion.
- Fuel: Excise duty on petrol and diesel will rise by Shs200 per litre, pushing rates to Shs1,750 for petrol and Shs1,430 for diesel (from Shs1,550 and Shs1,230 respectively). The change aims to raise Shs450 billion but could drive up transport and commodity prices nationwide.
- Sugar and Sweetened Goods: Excise duty on sugar jumps from Shs100 per kg to Shs300 per kg, affecting juice, tea, coffee, and processed foods. This “health levy” extension targets consumption taxes while addressing public health concerns.
- Other items in the pipeline include potential adjustments to mobile money, alcohol, and various goods, as the government widens the tax net.
These proposals come as Uganda eyes a Shs69.399 trillion national budget for FY 2026/27 (down from the previous year’s allocation to promote fiscal discipline), with domestic revenues expected to rise Shs2.863 trillion overall through growth, better compliance, and reforms.
Economists and civil society groups have mixed reactions: Supporters argue the hikes are necessary for infrastructure, debt management, and services like health and education. Critics warn of inflationary pressures on low- and middle-income households already grappling with high living costs, transport fares, and food prices.
The measures are part of ongoing consultations, with Parliament set to debate and potentially amend them before enactment. URA and the Ministry of Finance emphasize that administrative efficiencies (like improved collection and reduced exemptions) will complement policy changes.
As Ugandans brace for the impact on wallets—from boda boda riders feeling fuel costs to salaried professionals seeing thinner payslips—the debate intensifies: Are these taxes the path to self-reliance, or a burden too heavy for ordinary citizens?
Pearl News Network will track developments as the budget process unfolds. Stay informed on how these changes could affect your daily life and the national economy.
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