A heavy tax has been imposed on motor cycle’s first registration which is likely to push cyclists into a dodgy lifestyle
HABARI DAILY I Kampala, Uganda I The 2026/27 national budget presented by Finance Minister Henry Musasizi today has triggered widespread debate after government introduced a series of new taxes and increased levies on several everyday products in a bid to boost domestic revenue and manage mounting fiscal pressures.
While government argues that the measures are necessary to finance development priorities and reduce dependence on borrowing, economists, business leaders and civil society groups have described the budget as one of the toughest in recent years due to the increased tax burden on consumers and businesses.
The budget comes at a time when Uganda faces growing expenditure demands, rising debt-servicing obligations and pressure to increase domestic revenue collections.
Motorcycle registration levy
Among the most notable measures is a sharp increase in the tax on motorcycles at first registration. The levy has risen from Shs200,000 to Shs500,000, a move government expects will generate an additional Shs26 billion. The increase is likely to affect boda boda operators and individuals seeking to purchase motorcycles, which remain one of the most affordable means of transport and employment in the country.
Government has also introduced a new stamp duty on the first registration and transfer of motorcycles, tricycles and quadricycles. Under the new measure, motorcycles, tricycles and quadricycles will attract a duty of Shs30,000, while certain other motorcycle categories will attract Shs200,000. Officials estimate the measure will raise Shs30 billion.
Consumers are also expected to feel the impact of increased taxes on essential household commodities.
Heavy tax on cooking oil
Excise duty on cooking oil has doubled from Shs200 to Shs400 per litre, with government projecting additional revenue of Shs25 billion. A new excise duty of Shs500 per litre or kilogramme has also been imposed on cooking fat, expected to generate Shs15 billion.
Similarly, excise duty on sugar has doubled from Shs100 to Shs200 per kilogramme and is projected to bring in Shs25 billion in revenue. Analysts warn that the combined effect of these measures could contribute to higher food prices and increase pressure on household budgets already strained by the rising cost of living.
The construction sector has not been spared. Excise duty on cement has increased from Shs500 to Shs750 per 50-kilogramme bag, a measure expected to raise Shs15 billion. Industry players fear the increase could raise construction costs and affect housing affordability as well as ongoing infrastructure projects.
Government has also introduced new taxes on paints and varnishes. Locally manufactured paints and varnishes will attract a tax of three percent or Shs50 per litre or kilogramme, whichever is higher, while imported varnishes will attract Shs2,000 per litre. The measure is expected to generate Shs24 billion.
Tax on single-use plastics
Environmental taxes have equally been strengthened. The tax on single-use plastics has increased significantly from 2.5 percent or US$70 per tonne to 25 percent or US$1,500 per tonne. Government says the measure is intended to protect the environment while raising Shs10 billion in additional revenue.
The tax increases come against the backdrop of an Shs84.39 trillion national budget that seeks to finance industrialisation, wealth creation, infrastructure development and human capital investments.
However, critics argue that a substantial portion of government expenditure continues to be absorbed by debt repayments and statutory obligations, limiting the amount of money available for direct service delivery and development programmes.
Some economists have expressed concern that increasing taxes on widely consumed goods and small-business inputs could place additional pressure on ordinary Ugandans. Others argue that government should focus more aggressively on improving efficiency, reducing wasteful expenditure and strengthening accountability before introducing additional taxes.
Civil society organisations have also questioned whether large allocations to security and debt servicing could constrain funding available for sectors such as health, education and local government services.
Domestic revenue mobilisation
Government, however, maintains that the new tax measures are necessary to strengthen domestic revenue mobilisation and support long-term economic transformation. Officials argue that increased revenue collection will help finance priority investments under the Fourth National Development Plan while reducing reliance on external borrowing.
Now that the budget has already been read, the debate is likely to focus on whether the additional taxes will generate the expected revenues without imposing excessive costs on households, businesses and the broader economy.
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