Uganda: Most Ugandans Struggle to Access Information On Taxes They Owe and How Revenues Are Used

18 October 2024
Afrobarometer (Accra)
By Makanga Ronald Kakumba

Fewer than half think the government uses tax revenues for the well-being of its citizens.

Key findings

  • Difficulty in accessing tax information: Three-quarters (76%) of Ugandans report difficulty in finding out what taxes they owe the government. An even larger majority (83%) say they find it hard to access information on how tax revenues are spent.
  • Tax avoidance: About one-third (35%) of citizens say that people in their country "often" or "always" avoid paying taxes they owe, a 14-percentage-point increase from 2012.
  • Perceived fairness of the tax system: Two-thirds (65%) of Ugandans say ordinary people have to pay too much in taxes. Only half as many (33%) say the same thing about the wealthy.
  • Trust and integrity of tax authorities: About six in 10 Ugandans (59%) say that "most" or "all" tax officials are corrupt, a 14-percentage-point increase from 2019 (45%). Only about one-third (35%) say they trust the Uganda Revenue Authority "somewhat" or "a lot."
  • Accountability on taxes: Fewer than half (46%) of Ugandans believe that their government usually uses tax revenues for the well-being of its citizens.
  • Ownership of technological devices and Internet use: Between 2017 and 2024, the proportions of Ugandan adults who own televisions and smartphones increased by 14 and 7 percentage points, respectively. Regular Internet usage increased almost fivefold, from 7% in 2017 to 32% in 2024. o But analysis reveals no correlation between ownership of technological devices or Internet usage and the perceived ease of accessing tax information.

Raising sufficient tax revenue remains a major challenge for Uganda's government. The country's tax-to-GDP ratio stands at 13.6% for the 2023/2024 fiscal year, short of its targets (16%-18%) in the current five-year Domestic Revenue Mobilisation Strategy (Ariho, Tusiime, & Zabali, 2024; Independent, 2021). This ratio is lower than some of its regional peers' most recent figures, with Kenya at 15.8% and Rwanda at 15% (Awino, 2023; International Monetary Fund, 2023).

Official statistics indicate that in 2021 only 1 million Ugandans paid income taxes, despite modest improvements in taxpayer registration (Oketch, 2021). According to the Ugandan Revenue Authority (URA), most "would-be taxpayers are hiding in the informal sector, whose contribution to the country's gross domestic product (GDP) is estimated at 50%" yet is largely untaxed (Kayiwa, 2022).

To enhance tax compliance and revenue collection, the URA has implemented several key initiatives, including digital tax stamps on goods, a real-time electronic invoicing system, voluntary disclosures on tax arrears, joint efforts with local governments to help informal firms formalise and become registered for tax, the annual Taxpayer Appreciation Awards, and periodic amnesty programmes (Uganda Revenue Authority, 2024). However, tax non compliance remains alarmingly high in the country (Camille, McNabb, & Dietrich, 2023).

While some people deliberately dodge tax responsibilities by finding loopholes in the system, others may fail to comply simply because of inadequate tax knowledge; indeed, this may be one of the major barriers to voluntary tax compliance (Kira, 2017; Tanui, 2016). Some scholars

therefore contend that enhancing citizens' knowledge represents a viable approach to boosting voluntary tax compliance (Loo, 2006; Saad, 2014). Studies in sub-Saharan Africa show a strong correlation between tax knowledge and tax-compliant attitudes (Ali, Fjeldstad, & Sjursen, 2013). Similarly, other scholars argue that tax knowledge enhances small business owners' willingness to pay taxes (Kamleitner, Korunka, & Kirchler, 2012).

Poor tax knowledge can breed distrust and negative attitudes toward revenue authorities (Niemirowski, Wearing, Baldwin, Leonard, & Mobbs, 2002). More obviously, inadequate knowledge can result in improper conduct and unintentional tax avoidance (Riahi-Belkaoui, 2004). Such a lack of knowledge may stem from either a dearth of information provided by tax collectors or difficulties in acquiring the relevant information.

The URA employs multiple strategies and initiatives to engage and educate citizens about taxation, including broadcasting programmes on radio channels and through its online television channel, publishing information in newspapers, running mobile tax units and targeted clinics, using digital platforms to spread the word, and launching mass information campaigns (Muzira, 2021; Matovu, 2021; Niyonshima, 2023).

Despite these tax-education initiatives, findings from a 2019 Afrobarometer survey module on taxation show that most Ugandans have difficulty figuring out what taxes and fees they are supposed to pay and how the government uses the tax revenues it collects. Is it a question of accessibility or inadequate tax education?

More recent survey data, from 2024, show that majorities of Ugandans question the fairness of their country's tax system, view tax officials as corrupt, and deem the URA untrustworthy. Fewer than half think the government usually uses tax revenues for the well-being of citizens.

Makanga Ronald Kakumba Makanga Ronald Kakumba is a research associate for Hatchile Consult Ltd., Afrobarometer's national partner in Uganda.

Read the original article on Afrobarometer.

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