The government has proposed a tax amendment to reduce excise duty on alcoholic beverages made from locally sourced ingredients such as sugarcane, cassava, and sorghum. The amendment seeks to lower the excise duty on un-denatured spirits with an alcohol content of 80% and above from Shs 5,000 to Shs 1,500 per liter.
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According to Moses Kaggwa, Director of Economic Affairs at the Ministry of Finance, the current tax policy has led to a 30% drop in revenue collections since its implementation in July last year. He also noted that the high tax rate has negatively affected local farmers, discouraged domestic manufacturers, and weakened the government’s import substitution strategy.
Members of Parliament on the Finance Committee have backed the proposed tax cut, arguing that it will help boost government revenue while benefiting local farmers. However, MPs have rejected a separate proposal to extend a corporate tax waiver for Bujagali Energy Limited. State Minister of Finance Henry Musaasizi had sought the extension, but MPs insisted that the Auditor General’s forensic audit report lacked critical details.
As a result, the Finance Committee, led by Amos Kankunda, has suspended further review of the amendments and summoned the Auditor General for clarification. This comes after Parliament previously denied the government’s request for a five-year tax exemption for Bujagali Energy Limited, granting only a one-year extension pending the audit.
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