The latest tax auditor’s report proposed that the government introduce new tax brackets for Ugandans earning higher incomes to ensure a fair and inclusive tax system.
Speaking at the launch of the Third Fair Tax Monitor 2021 report in Kampala on Wednesday, Daniel Lukwago of Oxfam described some of the recommendations as necessary due to the pandemic disruptions on livelihoods and poor households.
“The Ministry of Finance and the Uganda Revenue Authority should make personal income tax more progressive by increasing the Pay As You Go (PAYE) entry threshold, increasing bracket tax rates graduates and focusing compliance efforts on high-income earners,” he said. when presenting the results.
The report was produced by Oxfam and the Southern and Eastern Africa Trade Information and Negotiation Institute (SEATINI) in collaboration with the Tax Justice Alliance, among other civil society organisations.
The Fair Tax Monitor is a research tool that identifies key bottlenecks within tax policies and systems and assesses their redistributive qualities to make recommendations for change.
According to the report, Uganda’s excise duty regime has a degree of progressivity where wealthier households pay more excise duty as a percentage of their consumption than poorer households.
However, in some cases, he notes that excise duties are regressive as they are generally flat-rate (such as the 0.5% tax on mobile money withdrawals). According to the report, some of these indirect levies affect low-income people more, especially women, who spend a higher share of their income on household items.
“The government should follow the path recommended by the International Monetary Fund, the United Nations and others to respond to the Covid 19 crisis by adopting progressive tax measures that increase the contribution of income from wealth and businesses to finance social support programs to cushion the effect of the pandemic,” Lukwago said.
Francis Odokorach, Country Director of Oxfam, said: “Tax systems are widely seen as marginalizing women, and not just in terms of the direct impact of taxes on income, wealth and behaviour.
“They are not designed in such a way as to pay sufficient attention to the net effect that combined tax and expenditure systems, both on paper and in practice, have on the immediate needs or strategic priorities that underpin the gender inequalities.”
Minister of State for Finance Henry Musasizi said the report is a tool that will identify bottlenecks in the tax system while assessing its progressivity, transparency and accountability.
“I had never thought about the gender aspect of taxation,” Musasizi said.
“The Fair Tax Monitor report contains practical recommendations related to the mandate of the Department of Finance,” he added.
Jane Nalunga, Executive Director of SEATINI, said: “We have been producing this report for three years. This answers the question of what a fair tax system looks like. The unique question of this year’s report is the impact of this tax system on gender.