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In a bid to reduce smoking and increase government revenue, the Ugandan government has unveiled a significant increase in excise duty on cigarettes as part of the 2025/2026 national budget.
Finance Minister Matia Kasaija made the announcement on Thursday, June 12, 2025, revealing that taxes on imported cigarettes will double, while local brands will see more moderate hikes.
The new excise duty changes, part of the Excise Duty (Amendment) Bill, 2024, have been approved by Parliament and are expected to take effect on July 1, 2025, pending presidential assent.
For East African Community (EAC)-manufactured cigarettes, the duty on soft cap varieties will increase from Shs 55,000 to Shs 65,000 per 1,000 sticks, while hinge lid packs will rise from Shs 80,000 to Shs 90,000 per 1,000 sticks.
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The most significant adjustments target imported cigarettes.
The excise tax on non-EAC soft cap cigarettes will increase by 100%, rising from Shs75,000 to Shs150,000 per 1,000 sticks.
Similarly, the duty on imported hinge lid cigarettes will double, increasing from Shs100,000 to Shs200,000.
"We have increased the taxes on cigarettes to discourage consumption but also to generate additional revenue," Minister Kasaija explained during the budget presentation.
This marks the first major tobacco tax hike in nearly seven years.
The increase has been welcomed by public health advocates, including the Uganda Tobacco Taxation Coalition (UTTC), who argue that raising taxes makes cigarettes less affordable, especially for younger smokers, and helps reduce tobacco-related diseases such as cancer and heart conditions.
However, some health experts have raised concerns that the tax hike on locally produced cigarettes is not steep enough.
They point out that the tax percentage on retail prices remains below the 70% recommended by the World Health Organization (WHO).
There are also fears that the large price difference between local and imported cigarettes may push smokers to cheaper local options instead.
The tobacco industry has strongly opposed the tax increases. Companies like Leaf Tobacco and British American Tobacco (BAT) warned that the hikes would lead to higher prices, reduced sales, and a rise in the illegal tobacco trade.
They suggested a gradual tax increase and called on the government to tackle illicit tobacco sales before implementing such steep hikes.
This change is part of a wider government strategy to raise "sin taxes" on harmful products and improve revenue collection for the Shs72.37 trillion budget.
The full effects on consumer habits, public health, and government finances will become clearer in the upcoming financial year.