- More than half (56%) of Ugandans said the country should fund its own development instead of depending on external assistance and loans.
- Where loans or development assistance are provided, six in 10 Ugandans (61%) preferred the government to make its own decisions about how to use the resources, and 53% would not want democracy and human rights practices to form part of loan conditionalities.
- Two-thirds (66%) of respondents said it is fair to tax rich people at a higher rate than ordinary people to fund government programmes that benefit the poor.
- A majority (53%) of citizens would rather pay lower taxes even if it means getting fewer government services, while 41% would prefer to pay higher taxes in exchange for more services.
- Access to tax information was a challenge, as three-fourths (76%) of Ugandans reported difficulty in knowing what taxes and fees they are supposed to pay to the government. o More than eight in 10 citizens (83%) reported difficulty in determining how the government uses tax revenues, and fewer than half (46%) thought tax revenues are usually spent in service of citizens’ well-being.
- Nearly six in 10 (58%) “disagreed” or “strongly disagreed” with the idea that the government should make sure that small traders and informal sector workers pay taxes on their enterprises. o Support for informal-sector taxation was 23 percentage points higher among Ugandans who thought the government generally uses tax revenues for citizens’ well-being than among those who disagreed (49% vs. 26%).
Maximising revenue collection is an essential tool in meeting a country’s expenditure commitments. For nearly three decades, the Uganda Revenue Authority (URA) has consistently pursued tax-base expansion and domestic revenue enhancement to reduce reliance on foreign aid and loans with unfavourable conditions (Ministry of Finance, Planning, and Economic Development, 2019). Despite impressive economic growth, job creation has not kept pace with the country’s high population growth rate of 3.5% per annum and its status as one of the world’s youngest populations (National Planning Authority, 2022). As a result, a significant portion of youth entering the labour force have little choice but to join the rapidly growing informal sector (World Bank, 2019).
The informal sector plays a vital role in Uganda’s economy, contributing 91.9% of total employment and 28.7% of gross domestic product (GDP) (Uganda Bureau of Statistics, 2021; Ministry of Finance, Planning, and Economic Development, 2022). However, despite its significant share of the economy, the informal sector contributes less than 1% of tax revenues collected by the tax authority (Wamai, 2021). The failure to tax the informal sector results in foregone revenues worth about UGX1 trillion (U.S. $273 million) per year (Oxfam & SEATINI Uganda, 2018). Only small shares of Uganda’s economically active population and operational businesses, 6.8% and 7.1% respectively, are registered for taxes, leaving large majorities of both people and firms beyond effective taxation. Uganda has one of the lowest taxpayer-to-labour-force ratios in East Africa (Oxfam & SEATINI-Uganda, 2018).
Experts estimate that Uganda’s revenue potential was around 26% of GDP in 2010 (Langford & Ohlenburg, 2015). However, in recent years the actual tax-to-GDP ratio has plateaued at around 13.9%, consistently falling below the 16% average for sub-Saharan Africa (Advocates Coalition for Development and Environment & Global Financial Integrity, 2024). The combination of low revenue collection, higher-than-planned public expenditure, and diminishing foreign assistance contributed to a budget deficit of 4.7% of GDP in fiscal year 2023/2024 (Ministry of Finance, Planning, and Economic Development, 2024a).
To bridge the fiscal deficit, the government has resorted to both external and internal borrowing, which over time has led to the accumulation of a heavy public debt burden. In 2018/2019, public debt stood at UGX46.36 trillion (U.S. $12.55 billion), equivalent to 36.1% of GDP (Ministry of Finance, Planning, and Economic Development, 2019). By 2023/2024, public debt had more than doubled, to UGX94.86 trillion (U.S. $25.59 billion), and the debt-to-GDP ratio sat at 46.8% (Ministry of Finance, Planning, and Economic Development, 2024b). The government now spends more than half of its domestic revenue on public debt servicing, an amount that exceeds anticipated revenue for the 2024/2025 fiscal year (Initiative for Social and Economic Rights, 2024).
This paper investigates citizens’ opinions about revenue collection and gauges past levels of support for generating more taxes from the informal sector.
Findings from a special module on taxation in Afrobarometer’s 2019 survey reveal that fewer than half of Ugandans supported the idea of taxing the informal sector, despite its being a significant generator of economic value. Support for taxing the sector was stronger among respondents who thought the government generally uses tax revenues for citizens’ well being.
A majority of Ugandans said the country should finance its own development instead of depending on foreign assistance. But if external borrowing were to be pursued, majorities rejected placing conditionalities on those loans.
Access to tax information was reported to be a challenge: Most Ugandans said it was difficult to know which taxes they were supposed to pay and how the government used the revenues it collected. Fewer than half of citizens believed that the government used tax revenues to finance programmes aimed at improving citizens’ well-being. This may partly explain why more than half of respondents preferred to pay lower taxes, even if it means fewer government services.
