In the upcoming financial year, Ugandans will need to spend more on their favorite beers due to increased taxes imposed by the govemenrnt. Finance Minister Matia Kasaija announced new taxation measures on Thursday, specifically targeting the alcohol industry, with a focus on imported brands of beer and wine.
One of the key measures introduced is a new tax of one thousand shillings on each kilogram of powdered beer. This type of beer, which has become popular in top bars and clubs, is imported from countries like Germany and transforms into beer when mixed with water. The new excise tax on powdered beer is expected to raise its final price, affecting its affordability for many revelers.
In addition to powdered beer, the excise duty on imported wines has been increased. The duty has been raised from 80 percent or Shs 8,000 per liter, whichever is higher, to 100 percent or Shs 10,000 per liter, whichever is higher. This significant hike is likely to impact the cost of imported wines, making them more expensive for consumers.
Players in the brewery sector have previously expressed concerns about high excise duties on beer. Currently, beer made from malt is subjected to a 60% duty or UGX 2,050 per liter, whichever is higher, while opaque beer faces a 12% duty or UGX 150 per liter, whichever is higher. Despite these existing duties, the sector now faces additional financial burdens with the new taxation measures.
In March, Uganda Breweries Managing Director Andrew Kilonzo warned against the government's plans to impose a 20% tax increase on both locally manufactured and imported spirits. He highlighted that Uganda's excise duties on spirits were already twice those in other East African countries. However, Minister Kasaija did not announce any new excise duties on spirits, indicating that the current rates remain unchanged.
While some analysts had suggested that the budget for the financial year 2024/25 was not overly burdened with new taxes, the alcohol industry, particularly imported beer and wine, will feel the pinch of the new measures. Ugandans, who associate beer with warm memories and social gatherings, will now have to dig deeper into their pockets to enjoy their favorite drinks.
As these changes come into effect, it remains to be seen how consumers and the alcohol industry will adapt to the increased costs. The government's decision to impose higher taxes on alcohol aims to boost revenue, but it also raises questions about the impact on affordability and consumption habits in Uganda.
