Gov’t Tables Shs84.2 Trillion Budget, Confirms Salary Enhancements and PAYE Relief

The government has unveiled a proposed UGX84.2 trillion national budget for the Financial Year 2026/2027, with projected domestic revenue of UGX44.5 trillion, as part of efforts to boost service delivery and economic growth.

Speaking to journalists at Parliament on Friday, the State Minister of Finance, Hon. Henry Musasizi, said the resource envelope has significantly increased compared to the previous financial year.

“The draft budget estimates which we shall present to Parliament on Wednesday next week contain a total resource envelope of UGX84.209 trillion, out of which the tax revenue is UGX44.5 trillion. And also to note is that in the resource envelope there is a movement from UGX72.76 trillion of FY 2025/2026 to now UGX84.206 trillion. This is about UGX11.6 trillion,” Musasizi said.

The minister attributed the increase to government’s commitment to meeting key priorities, including salary enhancements and infrastructure development.

On salary harmonization, Musasizi confirmed that both arts and science teachers will benefit, though in a phased approach.

“Yes, but in a phased manner. This financial year we have provided 25%. We will be providing 25%, 25% until when we get to the level where other science teachers are,” he explained.

He added that primary school teachers will also benefit, with government targeting a 100 percent salary increment within four years.

“And also, in the primary category we are providing 25%. We want to increase their salary to 100% but we want to achieve this in four years because the total is about UGX2.5 trillion and now we have been able to provide UGX550 billion.”

Musasizi further revealed that other categories of public servants, including Chief Administrative Officers, will also benefit from salary enhancements.

“Government has been gradually enhancing salaries of staff. The assistant commissioners have been enhanced, and next year we are going to enhance the principals, and the other year we shall go to the officers until when we get to the lowest level,” he said.

“When I mention commissioners, even the chief administrative officers in districts are at the level of commissioners. They are now earning UGX12 million. They have moved from the previous UGX1.8 million to now UGX12 million.”

On taxation, the minister dismissed reports that the Pay As You Earn (PAYE) rate would be increased, clarifying that government instead plans to raise the tax-free threshold.

“The thresholds have been UGX235,000, that is where we have been starting from. Now we are proposing to start from UGX335,000. In other words, we have exempted all those people who earn below UGX335,000,” Musasizi said.

He emphasized that the measure is aimed at easing the burden on low-income earners, even though it will result in revenue loss.

“So, there is nothing like increasing the tax. Instead, we are losing. We are going to lose UGX96 billion as a result of this proposal. It is mainly to favour those who earn little from paying taxes.”

Musasizi also clarified that the 40 percent PAYE rate remains applicable only to high-income earners earning above UGX10 million per month.

Meanwhile, the minister also revealed that the Uganda Revenue Authority (URA) is expected to collect UGX44.5 trillion in taxes to finance the budget.

However, he noted that fuel prices are likely to rise after the ruling party endorsed a proposal to increase fuel tax by UGX200 per litre.

According to the Government Chief Whip, Denis Hamson Obua, the National Resistance Movement (NRM) Parliamentary Caucus agreed on key priorities for the 2026/2027 budget, including salary enhancement for teachers and security personnel, infrastructure development, and preparations for the Africa Cup of Nations 2027.

Parliament is expected to finalize and approve the national budget before the end of April 2026.