Tax on Soft Drinks Slashed, Confectionery Products Exempted

Government has removed excise duty tax from confectionery products such as sweets, chewing gum, cakes, bread among others through corrigenda to the excise duty bill.

The Ministry of Finance officials led by the Minister of State for Planning, David Bahati said that ever since they imposed a tax of 20% on confectioneries, there has been unfair competition which has led to some people to even begin smuggling them into the country.

The corrigenda (correction) offers exemption of excise duty on local confectionery products and a reduction of excise duty from 13% to 12% on locally manufactured soft drinks as well.

“This is aimed at enhancing competitiveness of the locally made drinks; the Ministry had committed to reduce excise duty from 13% to 10 % in the financial year 2018/19, however because of the revenue implications, we propose to reduce it by 1% so that we handle it in a phased manner,” Bahati said.

Moses Kagwa the acting Director Economic Monitoring revealed that the local sweets industry was suffering from smuggled products hence the need for an incentive.

However, this left legislators divided on the exemption for confectioneries where the committee chairperson, Henry Musasizi argued that confectionery products are luxuries and not deserving of an exemption.

“These are one of the luxuries, confections are not among the basic needs, we would think these are areas where we would be collecting revenue, instead of reducing tax,” Musasizi said.

The Vice chairperson, Loy Katali disagreed stating that the sector employs several women groups who will benefit from the incentive.

The decision to reduce tax on soft drinks has been welcomed by the representative of soft drinks companies, Simon Kaheru who noted that this is a big step and they will continue speaking to government so that they can be able to compete with other people in the region.