The Minister of State for Finance (General Duties), Henry Musasizi, presented a package of lottery tax proposals to Parliament to finance Uganda’s proposed Shs 84 trillion budgets for the 2026/27 financial year up from Shs 72 trillion in the current financial year signaling a decisive shift toward funding the budget through domestic resources.

The tax bills submitted to the Finance Committee include the Income Tax (Amendment) Bill, 2026; the Excise Duty (Amendment) Bill, 2026; the Value Added Tax (Amendment) Bill, 2026; the Tax Procedures Code (Amendment) Bill, 2026; the Stamp Duty (Amendment) Bill, 2026; the External Trade (Amendment) Bill, 2026; the Lotteries and Gaming (Amendment) Bill, 2026; and the Traffic and Road Safety (Amendment) Bill, 2026.

“These Bills are intended to raise revenue, foster compliance, and support the Uganda Revenue Authority in its work,” Musasizi said. He told legislators that revenue mobilization plays a critical role in financing government priorities for socio-economic transformation. Musasizi also noted that the proposed amendments are complemented by improvements in tax compliance. He said the strategies are designed to expand the tax base by bringing in individuals and businesses that are currently outside the tax net.

The new tax proposals come at a time when external financing is tightening. Geopolitical tensions are reshaping global financial flows, and public debt is rising, leaving the government to rely heavily on domestic resource mobilization. According to technocrats, the proposed tax measures are expected to generate Shs 1.741 trillion directly, with an additional Shs 3.164 trillion from improved tax administration pushing Uganda’s revenue-to-GDP ratio to 15.5%.

However, beyond the figures lies a deeper national debate. The discussion pits fiscal urgency against questions of equity, growth, and survival. At the centre of this debate is a fundamental question: who should carry the burden of Uganda’s economic future?

Uganda’s economic context is far from ordinary. Public debt has climbed to Shs 126 trillion as of December 2025, while domestic revenue targets continue to rise sharply. The government aims to collect Shs 44 trillion in the coming financial year an increase of 19.3%.

The day after Musasizi presented his proposals to Parliament, a coalition of about 60 civil society organisations under the Tax Justice Alliance-Uganda gathered at the Southern and Eastern Africa Trade Information and Negotiations Institute (SEATINI-Uganda) headquarters in Kampala. Their aim was to challenge the direction of Uganda’s tax policy.

Jane Nalunga, the Executive Director of SEATINI-Uganda, said the government must recognize that Uganda is operating within a turbulent global system. “We don’t operate in a vacuum; we are part of a broader global economy, and the economy is in turmoil. There are geopolitical tensions. We first had the Ukraine-Russia war, now we have the US, Israel-Iran war,” she said. “As the saying goes, when giants fight, the grass suffers and you have seen the impact on our economy.”

She added that aid has declined and that countries are increasingly looking inward. “We have seen aid going down and each country is on its own. The US is saying America first; Europe also has its own challenges. So, we need to recognize that. As Uganda, nobody owes us a living. We need to look inwards, and we need to grow our economy.”

Even so, Nalunga stressed that as Uganda looks inward to mobilize its own resources, it must do so carefully. She said taxation is not only about raising revenue; it is also about governance. She explained that tax must serve four core functions: revenue generation, redistribution, repricing harmful behavior, and strengthening representation. “Taxation is at the heart of economic development,” she said. “But it must be fair, equitable, and accountable.”

The proposed tax bills cover nearly every major revenue instrument, income tax, value added tax, excise duty, stamp duty, and external trade. Some measures are aimed at broadening the tax base. For example, the proposal to raise the VAT threshold from Shs 150 million to Shs 250 million is expected to reduce compliance burdens for small businesses while allowing the tax authority to focus more on higher-yield taxpayers.

Other measures target compliance gaps. A 0.5% minimum tax on companies that declare losses beyond seven years is intended to curb tax avoidance. In addition, withholding taxes on digital distribution agents and entertainers are designed to capture income from sectors that remain largely informal.

According to Aloysius Kittengo, the Programme Coordinator for the Financing for Development programme at SEATINI, the measures represent necessary steps. “We appreciate the effort taken by the government to broaden the tax base,” he said. He pointed to improvements in mechanisms such as requiring event promoters to withhold taxes from entertainers.

“It has been in place, but there was a loophole in understanding how they (URA) can collect that withholding tax from the entertainers. It is an opportunity for us that they were able to identify who can work hand-in-hand with URA,” Kittengo said.

He also highlighted another measure as beneficial for revenue mobilization: requiring Ugandan companies and financial institutions that pay interest on debt acquired from foreign financial institutions to withhold a percentage so that Uganda retains more money locally, while still collecting the revenue the country needs. Yet even as some reforms aim to widen the tax net, critics argue that other measures deepen the burden particularly through indirect taxes.

One of the most contested aspects of the proposals is what analysts describe as a “carrot and stick” approach. On one side, the government proposes raising the PAYE threshold to increase disposable income for low earners. On the other, it significantly increases excise duties on essential goods fuel, sugar, cooking oil, and cement. “You are increasing disposable income on one side but reclaiming it through indirect taxes on goods people rely on daily,” Kittengo said.

Fuel prices, in particular, have become a major flashpoint. The proposed increase of Shs 200 per liter on petrol is expected to ripple across the entire economy raising transport costs, increasing production expenses, and ultimately worsening the cost of living.

For Emmanuel Kashaija, the Programme Manager for Gender and Economic Justice at the Forum for Women in Democracy (FOWODE), the impact is deeply gendered. “Fuel has a multiplier effect on everything,” he said. “Women in rural areas rely on public transport for healthcare. If transport costs rise, some may miss critical services like antenatal care because our government doesn’t have a public ambulance system covering the entire country.”

“So, at some point, when you think you are generating more income, some women may not be able to make it to the hospital when they need care because the boda boda has become too expensive,” Kashaija continued. He added: “Instead of taking the four (mandatory) antenatal visits, they might end up taking two… and you end up doing more harm than good.”

Kashaija said the government should cap excise duty on fuel at inflation levels. “Revenue can grow naturally as more people own cars and boda bodas. You don’t have to increase excise duty every single year to generate more revenue,” he said.

The tension between revenue mobilization and household welfare is most visible in the taxation of basic commodities. The proposed increase in excise duty on sugar from Shs 100 to Shs 300 per kilogram has drawn sharp criticism, especially from advocates working with the informal sector.

Maureen Wagubi, the Chief Executive Officer of the Institute for Social Transformation, warned that the move could devastate livelihoods. “Sugar is not a luxury,” she said. “It is a daily necessity. From households to small businesses such as juice vendors and bakeries, this tax will hurt everyone.”

She added, “How many of us, at the start of the week, haven’t received a call from the village asking for money for sugar? If you increase this price, how many people are going to afford it? How many are going to afford cooking oil?”

Wagubi argued that such measures risk pushing vulnerable populations further into poverty, particularly women who dominate small-scale trade. “We are killing the economy, we are killing our people, and we are going to go back to the begging hand, and this is not where we want to go,” she said.

In a counterpoint, health advocates argue that higher taxes on sugar could produce long-term benefits. Moses Talibita, the Legal Compliance Officer at the Uganda National Health Users/Consumers Organization, said the government’s approach could reduce consumption of unhealthy products and, in turn, lower disease burdens. “Tax is one of the most effective tools for reducing disease,” he said. “When you make unhealthy products expensive, you reduce consumption.”

Talibita linked rising sugar consumption to increased cases of dental disease, heart conditions, and other non-communicable diseases, adding that this could strain households and the health system over time. He further noted that frequent dental issues among Ugandan children are associated with high sugar consumption, though he did not provide supporting evidence in the discussion.

The proposed doubling of excise duty on cement from Shs 500 to Shs 1,000 per 50kg bag has also raised alarm in a country already facing a housing deficit of 2.6 million units. Analysts warn that higher cement costs, combined with an increase in stamp duty on land transfers, could make home ownership even more unattainable for low-income households.

Imelda Namagga, an economist and Board member at the Civil Society Budget Advocacy Group (CSBAG), highlighted the social implications. “This will disproportionately affect the poor, especially widows and orphans who inherit land,” she said. “It risks making land ownership a privilege of the wealthy.”

Namagga expressed concern about the proposal to increase stamp duty on land transfers from 1.5% to 3%. “If they are going to subject the value of that land to 3%, it will make it hard for orphans and widows to transfer land, and land will largely remain the preserve of the rich,” she said. “This move… is really not for the poor.”

She added that women do not have equal access to land, and that the introduction of such taxes could further limit women’s ability to acquire or transfer property. “Women don’t have access to land, and now when you bring this kind of tax, it means that women and many more other people are not going to afford land,” she said. Wagubi suggested that instead of focusing only on taxing transfers, government should invest in formalization and improve women’s access to assets through subsidized and digitalized land registration.

Another proposal that has attracted intense debate is the planned 30% environmental levy on second-hand clothing, commonly referred to as “mivumba.” Baker Bahasha, the Research, Policy and Advocacy Officer at the Kampala City Traders Association (KACITA), strongly opposed the plan. “Out of every 10 Ugandans, about eight are wearing second-hand clothes,” he said. “If you impose this levy, where do you expect people to go?”

Although Bahasha acknowledged concerns about the environment, he argued that government should think more deeply before implementing the proposal. He said local textile industries are not yet able to meet demand and that the reform should be approached gradually and with a more nuanced design, including classification and phased implementation. However, not all proposals have been rejected.

There is broad support for higher taxes on alcohol, plastics, and gambling as tools to curb harmful behavior. The planned increase in gambling tax from 20% to 30% has been welcomed by social advocates. “Betting is affecting families, education, and mental health,” said Kennedy Oluma, the Coordinator of the Uganda Parliamentary Network on Illicit Financial Flows and Tax Justice. “This is not just about revenue; it’s about protecting society.”

At the same time, some analysts argue that Uganda is overlooking untapped revenue potential, particularly in the mining sector. Oscord Mark Otile, a researcher at the Advocates Coalition for Development and Environment (ACODE), noted that mining contributes less than 2% to GDP despite its historical importance. “This sector has the potential to relieve citizens of the tax burden,” he said. “But it must be properly structured.”

Behind many of the arguments is an even deeper issue: public trust. With 42% of domestic revenue going to debt servicing, citizens increasingly question whether increased taxation will translate into better public services. Nalunga framed the issue as one of accountability. “We are not saying people should not pay taxes. But taxes must be fair—and government must use them prudently,” she said.

She also criticized what she described as limited time for public consultation, arguing that meaningful participation is essential. “If citizens see their views reflected, they are more likely to comply,” she noted. As such, Uganda’s 2026/27 tax proposals reflect a country at a crossroad caught between fiscal necessity and social realities. The need for revenue is undeniable, but the way revenue is raised remains contested.

What is clear is that taxation is no longer just a technical policy matter. It is deeply political and profoundly social. As Uganda prepares for the next financial year, the challenge will not only be raising revenue, but raising it in a way that is fair, sustainable, and trusted because the success of any tax system depends not only on how much it collects, but on whether citizens believe it is worth paying.