By Kiyimba Bruno
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.