Parliament Health Committee Proposes 20% Tax Increase on Alcohol and Tobacco to Compensate for Reduced Donor Funding

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The Parliament Health Committee has recently recommended a significant increase in taxes on products known to have harmful effects such as tobacco and alcohol. Saying that the proposed 20% hike aims at bridging the gap left by donors, who have pointed out plans to reduce funding to Uganda’s health sector.

According to Dr. Charles Ayume the Chairperson Health Committee during the presentation of the ministerial policy statement for the health sector, over the years, health development partners have supported the healthcare care system, especially in the areas of immunization, HIV/AIDS, Tuberculosis, Malaria control, and infrastructure development.

“So the Members of parliament on the committee suggest that the tax rate on harmful products be increased by 20%, urging that, Uganda’s revenue could increase from Ugx 362.412Bn in the financial year 2022/2023 to Ugx 2.762Trn in FY2026/2027,” Dr. Ayume said.

He noted that the Health committee is concerned about the increasing resource envelope caused by global factors and a shift of priorities.

Dr. Ayume added that, in light of the constrictive fiscal space, the committee observed that the government should consider some innovative domestic financing mechanisms to generate some additional revenue for the health sector,

“The committee suggested ring-fencing of the social media tax for upgrading of health centers and community health financing as the community health strategy launched remains largely unfunded,” Dr. Ayume said.

Uganda’s health sector spending has been on a steady increase in both nominal and real terms since the 2016/2017 financial year the health sector has more than doubled from Ugx 1.456 Trillion to Ugx 4.053 Trillion in the last budget of the 2023/2024 financial year.

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