Why do Ugandans pay taxes?


Last week, Kigo Thinkers, a think tank advocating deeper, analytical thought regarding public policy as a requirement for good citizenship, published a paper titled “Governance and the Tax Regime”.

The paper concludes a process that began with a ‘Policy Dialogue’ organised by Kigo Thinkers in September. Previous Kigo Thinkers’ discussion forums this year have considered Bank of Uganda’s controversial use of interest rates to combat inflation in 2011 and the land question in Uganda.

A paper, “Bank Loan Interest Rates: Questions of Governance, Social Responsibility and Good Practice”, was launched in May.

Last week’s particular ‘Thinking Session’ focused on the purposes of taxation in Uganda. There is a contention that despite paying taxes, be they direct or indirect, Ugandans have limited benefits from funding their government, and that it is our political leaders that gain the most.

Do we have a national tax policy that is understood by citizens? It was evident that even the young journalists who covered the paper launch had minimal understanding of how our taxes are used to attain Uganda’s ambitions!

A ‘provocation piece’ by Sunday Vision’s columnist, Dr Ian Clarke on August 17, 2014, in which he decried the apathy of especially taxpayers to the numerous scandals regarding grand corruption and theft, initiated the discussions. We don’t care enough about public servants who engage in corruption because we falsely think it is government’s money. How come many of us are unable to work out that the government has no businesses and hence cannot have its own money?

On the other hand, it is understandable why we are unconcerned about government’s use of tax money, our money! Only about one million Ugandans pay direct taxes. The 2014 census results should tell us soon how many are engaged in gainful employment but direct taxpayers are the salary workers who may be the only ones who feel the pain of paying tax at the end of the month.

The removal of graduated tax for political reasons did not help. Local governments are on their knees because of lack of funding. President Museveni, who used to be the chief promoter of new districts, has now accepted that we cannot afford any more because most are struggling. It is the central government that funds local authorities and President’s Office pays the RDCs.

It is also not true that the several indirect taxes are any less painful than the graduated tax. Indirect taxes are unclear to many Ugandans. Previously, you would buy fuel, say for Shs 40,000, and that would last five days or a week going to work and back home only. Now fuel worth that same amount of money might last just two days!

It is the same with many other commodities. Consequently, we are usually annoyed with fuel stations, supermarkets and other service outlets but not the government that has hidden a tax in most essential items.

The removal of graduated tax was implicitly also a removal of the right to demand accountability and local services. Take the example of our own Kigo road: many of the users pay for fuel directly or through commuter taxi fares but we cannot then argue that government should urgently tarmac our road using the taxes we pay whenever we buy fuel. However, if we were paying graduated tax, we would certainly have a stronger basis to agitate for our road.

There is an argument that if we still had graduated tax, government would not need to invest heavily in the tools of public order enforcement or coercion! We now have the Public Order Management Act and the Uganda Police Force seems a lot more unfriendly with the acquisition of sophisticated tools to keep us in line.

A participant at the Kigo Thinkers’ forum raised a pertinent point which I put to you here: Which intelligent policymaker recommended taxes on basic foods in a country that has regions struggling with nutritional challenges? Who suggested the taxation on farm inputs including hoes and wheelbarrows? Was the purpose of this tax to discourage my granny in the village from using hoes so that she buys a tractor and becomes a large-scale farmer?

I would support the taxing of paraffin had it been intended to improve the health of Ugandans; children growing up inhaling paraffin fumes are in trouble! However, the explanation is that this tax will raise Shs 12 bn to Shs 15bn! So is the government keen on citizens buying more paraffin so that it raise more money?

Yet, it is well known that only a privileged 14 per cent of Ugandans can access electricity! But if the government needs an extra Shs 15bn, surely it should be easy to borrow from Parliament or the President’s Office!

It is the literature and fine art students of Taibah International School that chose the images for the front and back covers of the publication. The front has two pictures with Mulago hospital above the title, and taxis lining up on a street that has a large, muddy, water-filled pothole.

The back cover has a super police patrol pickup truck fitted with armoured metal stands to support a large carrier on top that is laden with about 20 riot police officers! The police vehicle is parked right in front of what seems like a modern shopping mall. Is this fine imagination or an understanding of the times?


The author is one of the founding Kigo Thinkers.

#ugandas #taxes #taxregime #bankofuganda #policy

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