By Kiyimba Bruno
kiyimba.bruno@gmail.com

Researchers from the Economic Research Policy Centre have tipped the government of Uganda on how best it can control tobacco consumption through using taxation.

In the document that was released by Ms. Anita Ntale and Dr. Ibrahim Kasirye,it was discovered that tobacco products are low priced as compared to other basic household items.

They noted that Although the percentage of tobacco use has reduced over the past 5 years from 10.5 percent in 2012/13 to 5.4 percent in 2016/17 (UNHS), smoking prevalence among the youth has remained higher than the national rate.

“The Uganda Global  Youth  Tobacco  Survey  Report  (2008)  found that  up  to 15.6 percent of the students had ever smoked cigarettes while the  national  rate  from  the  2009/10  UNHS  was  8.5 percent” they said.

On the changes in the exercise tax, the researchers noted that although  the excise  tax  rate  has been increasing since 2011/12, this has not been at a regulator  predictable.

“The 2017  excise  tax  diagnostic  study  by  the  World  Bank showed that in the past 25 years, for every 1 percent increase in GDP the  excise  tax  on  cigarettes  and  other  tobacco  products  has only increased by 0.18 percent and as such excise tax  revenues  on  tobacco  products  are  highly  inelastic” they said.

In their document it is revealed that Taxation  as  a  tool  for tobacco  control is underpinned by two competing  objectives for governments which are optimizing revenue by imposing higher taxes as well as using the higher prices borne out of those higher taxes as a deterrent to suppress consumption and reduce the resultant negative externalities.

Beyond  pegging  the  tax  changes  to inflation, the researchers say there  is  a  need to  unify  the  tiers  in  the  tax structure  and  remove preferential tax rates for domestically produced cigarettes.

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