Tanzania Proposes Higher Levies on Cigarettes and Sugar to Fund UHI

 The Government of Tanzania has proposed new tax measures to strengthen the financing of the country’s Universal Health Insurance (UHI) programme. The proposals, announced by Finance Minister Ambassador Khamis Mussa Omar during the presentation of the 2026/27 national budget, seek to generate additional revenue through increased levies on cigarettes and sugar. 

Under the proposed amendments to the Excise Duty Act, excise duty on cigarettes classified under HS Headings 24.02 and 24.03 will increase by TSh 20 per 1,000 cigarettes. The government has also proposed amendments to the Sugar Act and its regulations to introduce a new levy of TSh 10 per kilogramme on both locally produced and imported sugar. Revenue collected from the sugar levy will be administered by the Tanzania Sugar Board (TSB) and remitted directly to the Universal Health Insurance Fund. 

The measures are expected to raise approximately TSh 7 billion in additional revenue, providing a dedicated source of funding for the government’s healthcare agenda. Beyond revenue generation, the proposals reflect a broader policy approach that links the consumption of products associated with public health concerns to the financing of healthcare services. 

For businesses, the proposed changes are likely to increase operating costs across several sectors. Tobacco manufacturers and importers may face higher tax liabilities, while industries that rely heavily on sugar as an input, including beverage, confectionery, dairy, and alcohol producers, could experience increased production costs. Depending on market conditions, some of these costs may be passed on to consumers through higher retail prices. 

If implemented, the reforms will not only support the expansion of healthcare coverage but may also influence consumer behaviour by making tobacco products and sugar-intensive goods more expensive. The proposals therefore serve both fiscal and public health objectives, reinforcing Tanzania’s efforts to secure sustainable financing for universal healthcare while encouraging healthier consumption patterns. 

(Daily News)