Uganda’s boldest environmental tax is also shaping up to be one of its most controversial budget decisions in years. The US$1,500 per tonne levy on plastics, embedded in the Shs84.3 trillion national budget passed last week, will add Shs5.55 million to every tonne of plastic entering the formal market when it takes effect in July 2026. The government says it will raise revenue and force industry leaders to take pollution seriously, while industry leaders claim it will have the opposite effect on both counts.
In a rare show of unity, manufacturers across the beverages, packaging, and consumer goods sectors are pushing back hard, warning of job losses, a smuggling explosion, and price shocks that will land squarely on the poorest Ugandans.
The Highest Rate in the Region
Before the policy debate even begins, the numbers make Uganda’s position stark.
Kenya, which banned single-use plastic bags as far back as 2017, is currently considering a levy of just $500 per tonne. Tanzania charges $200. Uganda’s proposed $1,500 rate would be the highest in East Africa by a significant margin, applied in a market where compliance infrastructure, border enforcement, and consumer purchasing power all lag behind regional peers.
For government, that rate translates to a projected Shs1.02 trillion in annual revenue if 2024 import volumes of 185,000 tonnes hold, representing roughly 2.3% of Uganda Revenue Authority’s Shs44.18 trillion target. A senior Treasury official framed the logic simply: “Polluter pays. If plastic is cheap, it’s wasted.”
Uganda does generate 600 tonnes of plastic waste daily. NEMA data shows only 40% of it is collected. The environmental problem is real. The disagreement is entirely about whether this tax solves it, or makes it worse.
Coca-Cola: “Ill-Conceived, Poorly Timed, Counterproductive”
Few companies have been as direct in their opposition as Coca-Cola Beverages Uganda.
Kirunda Magoola, a Director at the company, said Coca-Cola “vehemently opposes” the new levy, describing it as “ill-conceived, poorly timed, and fundamentally counterproductive to its stated objectives.”
His argument cuts to the heart of the industry’s case: rather than solving the plastic waste challenge, the tax will sharply increase production costs, erode the competitiveness of local manufacturers against cheaper imports, and ultimately pass higher prices onto consumers who are already stretched.
The sting in Magoola’s statement, however, was directed at the environmental logic itself. He warned the tax “disincentivizes ongoing investments in recycling and circular economy initiatives by diverting resources away from collection and recovery efforts toward tax compliance.”
In plain terms: companies that were building recycling capacity will now redirect that money to paying the taxman.
“The likely outcome is reduced formal sector activity, growth in informal and unregulated alternatives, and a net decline, not increase — in tax revenues over time,” Magoola said.
UMA: “Jobs Will Be on the Line”
Uganda Manufacturers Association Executive Director Dr. Ezra Muhumuza Rubanda was equally blunt. He called for an immediate national mitigation measure, including the possibility of halting the tax application altogether.
“Jobs will be on the line,” Dr. Rubanda said. “It’s obvious. The sector employers will be forced to downsize or even run out of market. And this has a trickle-down effect. Plastics play a big role in the thriving construction sector. All this will be affected.”
Mukwano Was Already Solving the Problem
Perhaps the most telling case against the blanket levy comes from Mukwano Group, whose CEO Tony Gadhoke has described a recycling operation that is already doing, at scale exactly what this tax is meant to incentivise.
Mukwano currently processes over 100,000 kilograms of post-consumer plastic waste every single day. Its plant takes PET bottles through cold and hot chemical washing before grinding them into flakes used by both local and international industries. Old, broken plastic products are turned into household planters and chairs. The bulk of the output is exported, earning foreign exchange. The collection network has created livelihoods for women and informal workers across the country.
“We take PET bottles, do cold and hot chemical wash, and grind them into flakes for use by international and local industries,” Gadhoke said. The company has invested “serious money” in this infrastructure.
The critical uncertainty is whether URA will exempt recycled content from the levy, a detail that has not yet been clarified. Mukwano’s entire model depends on that answer. If recycled flakes are treated the same as virgin resin, Uganda’s most advanced recycling operation gets taxed on the very product it has built to reduce plastic waste.
What It Costs at the Shop
URA’s own estimates give a consumer-level picture of what the levy means in practice.
A 500ml water bottle goes up by Shs55.5. A one-litre cooking oil bottle adds Shs194. A 50kg sack of rice or flour gets Shs444 more expensive. A 20-litre jerrycan — a staple in homes without running water — rises by Shs4,440.
Gadhoke was unsparing: “The public will not be able to afford simple products like bread. The packaging costs will become too high.”
These are not luxury goods. They are the everyday basics of Ugandan households, and the cost increase will be felt most by those least able to absorb it.
A Smuggler’s Windfall
Industry’s sharpest warning, however, is about what happens at the border.
“This excise is going to invite serious dumping of plastics across our porous borders,” Gadhoke said. “Casual importation from neighbouring countries shall explode and become a nuisance.”
The argument is straightforward: with Uganda’s rate triple Kenya’s proposed levy and more than seven times Tanzania’s, the arbitrage opportunity for informal traders will be enormous. Compliant formal sector manufacturers — who keep records, pay taxes, and operate within the regulatory system — will face direct competition from imported plastics that have paid nothing.
“Excise duties on plastics will only increase competition for the formal sector, as the informal players don’t keep records and therefore are never on the radar,” Gadhoke said.
The Industry Alternative: Incentivise, Don’t Punish
Manufacturers are not simply opposing the tax — they are presenting an alternative framework built around Extended Producer Responsibility.
Mukwano helped found GASP — Green Action for Sustainable Production — alongside Coca-Cola, Crown Beverages, Riham, and Uganda Breweries, specifically to create a private sector-led system for managing post-consumer plastic waste.
Gadhoke outlined three specific proposals: tax holidays and incentives for companies investing in recycling plants and value-addition for export; penalty thresholds for firms that fail to use a minimum 25% traceable post-consumer waste in their production, with rewards for those that exceed it; and mandatory EPR membership for all plastics dealers, requiring them to join associations like GASP and participate in buying and reprocessing databases.
The logic is pointed: “Penalise those that don’t use minimum 25% traceable post-consumer waste. Don’t punish those already solving the problem.”
What Remains Unanswered
With less than two months until implementation, critical questions have no answers.
URA has not confirmed whether the levy applies to recycled flakes, finished goods, or only virgin resin — a distinction that could determine whether Uganda’s recycling sector grows or collapses. There is no public clarity on exemptions for medical or agricultural plastics. The enforcement mechanism at porous borders — where the smuggling threat is most acute, has not been explained.
The Tax Procedures Code Amendment Bill, expected before Parliament next month, is meant to provide the detail. UMA and GASP members have announced plans to petition for phased implementation and targeted exemptions for recyclers.
The Bottom Line
Uganda’s plastic waste crisis is not imaginary. The environmental case for intervention is legitimate. But the form this intervention has taken — a flat, unstructured levy that does not distinguish between a company recycling 100,000 kilograms of waste daily and one dumping virgin plastic into the market — risks punishing the very behaviour it should be rewarding.
Government will collect revenue, at least in the short term, from those operating formally. What it may also collect, if industry’s warnings prove accurate, is a wave of job losses, a surge in smuggled plastics, and a public whose groceries, water, and basic goods just got quietly more expensive.
Whether Parliament course-corrects before July remains the only open question that matters.
