Kampala, Uganda – 23/01/2019

Under Oxfam in Uganda’s Finance for Development Programme 2018, Oxfam and SEATINI Uganda are launching a study entitled Fair Tax Monitor Study: Uganda. The launch will take place this afternoon in Kampala and hold a number of discussions and panels, including the presence of the Honorable Matia Kasaija, current Minister of Finance Planning and Economic Development of Uganda. The research will enable citizens, civil society organisations, government and other key stakeholders to influence tax processes at different levels for a fair, just and equitable tax system.

The Fair Tax Monitor (FTM) is a unique evidence-based advocacy tool that identifies the main bottlenecks within tax systems and provides strong evidence for advocacy work at national and international level. The tool allows for a comparison of tax policies and practices in different countries, using a standardized methodology and unified research approach thanks to a jointly developed Common Research Framework (CRF). The Fair Tax Monitor is funded through grants provided by the Swedish International Development Agency (SIDA) and the Dutch Ministry of Foreign Affairs through the Strategic Partnership program.

The FTM was developed in 2014 under the coordination of Oxfam Novib and Tax Justice Network – Africa (TJN-A). The pilot phase of the project in 2015/16 followed the development of the CRF and resulted in the publication of FTM national reports by four countries (Bangladesh, Pakistan, Uganda and Vietnam), as well as a Composite Report which looked into similar challenges and common issues faced by the analyzed countries. The current edition of the FTM is based on the 2017 CRF. From the original four countries that took part in the pilot phase in 2015/16, the FTM now also includes Cambodia, Nigeria, OPT (Occupied Palestine Territories), Senegal and Tunisia.

The level of fairness of a tax system as assessed in the Fair Tax Monitor Study under the CRF is determined by considering six distinct topics: (i) Distribution of the tax burden and progressivity; (ii) Revenue sufficiency and tax leakages; (iii) Corporate tax exemptions, governance and transparency; (v) Effectiveness of the tax administration; (vi) Government spending; and (vi) Transparency and accountability.

The research in Uganda , which was conducted in 2017/18, is mainly based on the literally review of documents and covers the national situation over the past five financial years. Among others, the main findings of the research include:

• Uganda has recently engaged in domestic tax reforms, however these are expected to focus more on establishing an “efficient” mode of collecting taxes, with less efforts being directed at the principles of equity and progressivity.
• Although citizens are not yet fully engaged in influencing fiscal policies, civil society organizations and the other non-state actors’ participation in shaping revenue policies at the national level is improving.
• Uganda is not performing well in reducing inequality through tax policy. The country has a regressive tax system, with high dependence on indirect taxes (for example, excise duty, VAT, and customs), which contribute about two-thirds of total tax revenues. Indirect taxation also affects women more because they spend a higher proportion of their income on consumer goods for their families.
• Uganda has seen a significant increase in Total Tax Revenue during the last 5 years from UGX 8.38 Tn (US$ 3.3 Bn) in 2013/14 to UGX 14.66 Tn (US$ 4.01 Bn) in 2017/18. However, Uganda performs poorly on actual collection of tax compared with the potential levels that could be collected.
•   Since there is no clear policy on tax incentives and exemptions, Uganda forfeits a lot of revenue. According to the Uganda Revenue Authority, Uganda’s lost revenue from tax incentives and exemptions alone amounted to UGX 8,440 Bn (US$ 3,073 Mn) from 2010/11 to 2016/17, an equivalent of 16% of the total tax revenue. The amount of revenue lost in 2016/17 was nearly equal to the agriculture budget (UGX 823.4 Bn, US$ 234 Mn- in 2016/17).
• Despite the increase in government revenue from UGX 10.6 Tn (US$3.76 Bn) in 2014/15 to UGX 27.4 Tn (US$7.50 Bn) in 2018/19, spending still outstrips revenue and increases the annual budget deficit. To finance the deficit, the government has continued borrowing, resulting into an increase in the public debt standing at US$ 10.53 billion (equivalent to 38.1% of GDP) as at March 2018.
• The government’s total budgetary allocation to the social sectors (education, health, social development) and agriculture increased over the last five years from UGX 3.85 Tn (US$ 1.4 Bn), in 2014/15 to UGX 6.20 Tn (US$ 1.7 Bn) in 2018/19. However, the high spending on interest payments, public administration and the military sector impacts negatively on government spending in social sectors and agriculture. The funds allocated to social sectors and agriculture has remained stagnant at a quarter of the national Budget, with Uganda unable to meet international and regional commitments.

As a next step after the launch of the report, Oxfam Uganda and local partners will implement engage with the public, civil society and policy makers on  the policy asks which have been developed based on the findings of the Fair Tax Monitor Study, implementing campaigns focused around taxation, public expenditure and budgetary transparency over the next two years.

 

Background info on the Fair Tax Monitor:

The Fair Tax Monitor (FTM) is a unique evidence-based advocacy tool that identifies the main bottlenecks within tax systems and provides strong evidence for advocacy work at national and international level. The tool allows for a comparison of tax policies and practices in different countries, using a standardized methodology and unified research approach thanks to a jointly developed Common Research Framework (CRF). The Fair Tax Monitor is funded through grants provided by the Swedish International Development Agency (SIDA) and the Dutch Ministry of Foreign Affairs through the Strategic Partnership program.

The FTM was developed in 2014 under the coordination of Oxfam Novib and Tax Justice Network – Africa (TJN-A). The pilot phase of the project in 2015/16 followed the development of the CRF and resulted in the publication of FTM national reports by four countries (Bangladesh, Pakistan, Uganda and Vietnam), as well as a Composite Report which looked into similar challenges and common issues faced by the analyzed countries. The current edition of the FTM is based on the 2017 CRF. From the original four countries that took part in the pilot phase in 2015/16, the FTM now also includes Cambodia, Nigeria, OPT (Occupied Palestine Territories), Senegal and Tunisia.

The level of fairness of a tax system as assessed in the Fair Tax Monitor Study under the CRF is determined by considering six distinct topics: (i) Distribution of the tax burden and progressivity; (ii) Revenue sufficiency and tax leakages; (iii) Corporate tax exemptions, governance and transparency; (v) Effectiveness of the tax administration; (vi) Government spending; and (vi) Transparency and accountability.