The majority of Ugandans don’t know the number of taxes levied by the government. This is according to the latest Twaweza’s Sauti Za Wanainchi Survey.
Taxes enable the government to reduce donor dependence and invest in the public services that allow society and the economy to thrive, as outlined in the government’s Domestic Revenue Mobilization Strategy (DRMS, 2019-2024).
According to the survey, which was released on Tuesday, approximately 70% of citizens are more likely to be fully aware of and pay VAT than any other tax in the country.Unofficial levies are the second most commonly mentioned type of tax, with thirty percent of citizens claiming to pay them.
Twaweza’s Sauti Za Wanainch Senior Programme officer, Marie Nanyanzi, says those that pay taxes and levies said they do so with the expectation the taxes will help improve public services (64%).
The second most cited reason for paying taxes is that it is compulsory (27%). Interestingly, the survey found that wealthy people are more likely to mention service delivery (71%) as a reason to pay tax, while poorer people are more likely to point to taxes being compulsory (36%).
The two forms of tax that citizens recall paying are VAT (69%) and unofficial levies (30%), well ahead of other forms of taxation.
Many of the people who say they pay unofficial levies probably mean the (often required) financial and/or in-kind contributions that people who live in a certain area have to make to help with local development projects.
A number of tax and taxation experts have in the past urged the government, particularly the Uganda Revenue Authority-URA, to increase taxation awareness. Many have indicated that tax morale, or the intrinsic motivation to pay tax, is very low among Ugandans.
They have observed that the willingness of taxpayers to voluntarily comply with their tax obligations beyond fear of being punished or fined remains low. Because of low tax morale, the Uganda Revenue Authority foots a hefty bill for tax enforcement.
Francis Robert Kabuye, from the Federation of Small and Medium Enterprises Uganda, while commenting on the findings, suggested that the government should provide more accountability to the citizens to motivate them to pay taxes.
Maurice Kibalya, the Bugabula South MP, agreed with a section of Ugandans who indicated their motivation for paying taxes was the need for improvement in service delivery.
URA has recently made efforts to increase tax morale by trying to account for infrastructure constructed using local taxes. It is common to find billboards next to infrastructure projects with a URA message thanking the taxpayer.
Despite those efforts to reach out to inform and engage today’s (and future) taxpayers towards a culture of tax compliance in which citizens see paying taxes as an integral aspect of their relationship with their government, the Sauti Survey found that some Ugandans are still avoiding paying tax.
Kibalya suggests that URA should cast the net wider to catch the big tax evaders, whom he said are usually big people in government.
Isaac Arinaitwe, a senior economist in the Finance Ministry’s tax department, says that there have been efforts to increase tax collection through information communication technologies (ICTs). According to the survey, seven out of ten citizens (70%) are aware of URA, although there are significant variations between groups. Urban residents are more aware than women (77% of men and 63% of women), urban residents are more aware than rural (81% versus 65%), and the wealthier and more educated are also likely to be more aware of URA.
Regionally, most citizens are aware of URA in Greater Kampala (84%) and the Central Region (87%) and the least in the Western Region (57%). However, only 1 out of 20 citizens (5%) has ever had contact with URA.
Among them, half rated this interaction as good. However, among citizens more broadly, ratings of the performance of URA are more mixed: 2 out of 10 citizens say that URA performs well (20%), similar figures are unsure (23%), and 1 out of 10 say they perform badly (11%).