The Revenue Effects of Uganda’s Tax Reforms, 1989-2008

Ayoki, Milton and Obwona, Marios and Ogwapus, Moses (2008): The Revenue Effects of Uganda’s Tax Reforms, 1989-2008. Published in:

Abstract

The Revenue Effects of Uganda’s Tax Reforms, 1989 - 2008 focuses on the link between tax reforms and revenue mobilization. It explores the options available for policy-makers on revenue mobilization in Uganda and tackles fundamental policy questions about what measures could result into fast revenue growth for Uganda, focusing on the tax reforms and macroeconomic issues. The elasticity and buoyancy indexes computed for the pre- and post-reform periods as well as for the combined period constitute a framework through which the impact of the reforms on each index between the two periods can be discerned. The approach provides the basis for identifying the sources of fast revenue growth and/or lagging revenue growth in the tax system, and the components of revenue growth which are within or outside the control of authorities.

This paper offers practical lessons for Uganda and other African countries attempting to achieve their revenue targets.

• Item Type: MPRA Paper
• Language: English
• Keywords: Tax Reforms, Domestic Revenue, Revenue Mobilization, Elasticity Index, Tax Buoyancy, Uganda
• Subjects: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C13 - Estimation: General; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E62 - Fiscal Policy; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E65 - Studies of Particular Policy Episodes; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H21 - Efficiency ; Optimal Taxation; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H24 - Personal Income and Other Nonbusiness Taxes and Subsidies; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H25 - Business Taxes and Subsidies; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H26 - Tax Evasion and Avoidance; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H27 - Other Sources of Revenue

References

Atingi-Ego, Obwona, M and Abuka, C.A. (2001) “Regional Integration Study of East Africa: The Uganda Country Report”, prepared for the ACEG.

Ayoki, M. (2002). “Impact of Corruption on Private Sector Investment in Uganda”, Final Research Report, prepared for ACCU.

Bategeka, L, Ayok, M and Mukungu, A. (2004) Financing Primary Education for All: Public expenditure and primary education outcomes in Uganda, Institute of Development Studies, Sussex.

Bank of Botwana. (2003). Annual Report, Gaborone.

Bank of Mauritius. (2003) Annual Report for the Year Ended 30 June 2002, Port Louis.

Bank of Mozambique. (2002) Annual Report, Maputo.

Bank of Namibia. (1999) Annual Report, Windhoek.

______________. (2000) Annual Report, Windhoek .

______________. (2003) Annual Report, Windhoek.

Bank of Zambia. (2000) Annual Report, Lusaka.

Banque De La Repubique Du Burundi. (2001) Repport Annuel, Bujumbura.

Central Bank of Kenya. (1999) Annual Report, July 1998 – June 1999.

Central Bank of Kenya. (2004) Monthly Economic Review, March 2004.

Chipeta, C. (1998) “Tax Reforms and Tax Yield in Malawi”, AERC Research Paper No. 81, Nairobi.

Cnossen, S. (2003) “The Incidence of Consumption Taxes in Member Countries of the South Africa Development Community”, paper prepared for the Southern African Conference on Excise Taxation, Centurion Lake Hotel, Guteng, South Africa 11-13 June, 2003.

De Rosa D.A., Obwona, M and Roningen, V.O. (2003) “The New EAC Customs Union: Implications for Trade, Industry Competitiveness and Economic Welfare in East Africa (unpublished report).

De Rosa D.A., Roningen, V.O. (2003). “Rwanda as A Free Trade Zone: An Inquiry into the Economic Impacts, Addendum on Fiscal Revenue Impacts and Tax Policy Options”, a report prepared for the Rwanda Ministry of Commerce and the U.S. Mission to Rwanda of the U.S. Agency for International Development.

Fjeldstad, O. (2003). “Fighting fiscal corruption: Lessons from the Tanzanian Revenue Authority”, Public Administration and Development, Vol.23, No.2 (May), pp. 165-175).

Fjeldstad, O and Rakner, L. (2003). Taxation and tax reforms in developing countries: Illustrations from sub-Saharan Africa. Bergen: Chr. Michelsen Institute.

Grandcolas, C. (2004) “VAT in the Pacific Islands”, an article based on a presentation made at the ADB 13th Tax Conference, 14-17 October 2003, Tokyo, Japan.

Ghura, D. (1998) “Tax Revenue in Sub-Saharan Africa: Effects of Economic Policies and Corruption”, IMF Working Paper.

Hess, R. (1998) “Synthesis of the Studies on the Harmonization of External Tariffs within the Cross-Border Initiative”, Draft Report, Imani Development.

Government of Uganda. (GOU). (1997) Budget Speech delivered at the meeting of the National Assembly, the International Conference Centre, 12th June, 1997 by Minister of Finance.

GOU. (1998) Budget Speech delivered at the meeting of the 6th Parliament of Uganda at the International Conference Centre on 11th June, 1998 by Minister of Finance, Planning and Economic Development.

GOU. (1999-2003) Background to the Budget 1999/2000, 2000/01, 2001/02, 2002/03, 2003/04, MFPED, Kampala.

GOU. (2001) Medium-Term Competitive Strategy for the Private Sector (2000-20005), MFPED, Kampala.

GOU. (various years) Statistical Abstracts 1996-2002, Uganda Bureau of Statistics.

Holmgren, T and Kasekende, L. (1999) “Aid and Reform in Uganda: Country Case Study”, Research Series No. 23, EPRC, Kampala.

Mambule, M.D. (2003). “Causes of Corruption in Uganda Revenue Authority”, unpublished MA Thesis, Institute of Economics, Makerere University, Kampala.

Mansfield, C.Y. (1972) “Elasticity and buoyancy of a tax system – A method applied to Paraguay”, IMF Staff Papers, vol.19.

Maxwell Stamp (2003). “Revenue Impacts of Uganda’s Trade Integration Strategy”, a report prepared for the Tax Policy Department, Ministry of Finance, Planning and Economic Development.

Ministry of Finance, United Republic of Tanzania. “Tax Revenue Collections from 1995/96 to 2003/04” (Electronic copy).

Ministry of Revenue, Government of Ethiopia (2004) “Tax Policy and Tax Administration Reform: Impact on Different Income Groups”, report prepared by Research on Economic Policy Implementation and Management (REPIM) for Ministry of Revenue, Government of Ethiopia, Draft Report, January 2004.

Monetary Authority of Singapore (2004) Monthly Statistical Bulletin, vol. 25, no. 1, January 2004.

Mujumbi, P., Ayoki, M., Obwona, M and Kempaka, G. (2000) “Review of how, when and why does poverty get budget priority?” Occasional Paper 9, Economic Policy Research Centre, Kampala.

Muriithi, M.K and Moyi, E.D. (2003) “Tax Reforms and Revenue Mobilization in Kenya”, AERC Research Paper 131, AERC, Nairobi.

Mutambi, B. (2004) “Tax Reforms and Revenue Productivity in Uganda”, draft report.

Mahler, W; Annett, A; Terkper, S and Bristow, J. (2000) “Uganda: Tax Policy and Tax Administration Measures to Increase Revenue”, Aide-Memoire, IMF.

National Bank of Rwanda. (2003). Annual Report 2002.

Osoro, N.E. (1993) “Revenue Productivity Implications of Tax Reform in Tanzania”, Research Paper No.20, AERC, Nairobi.

Prest, A.R. (1962) “The Sustainability of the Yield of Personal Income in the United Kingdom”, Economic Journal, vol.72.

Rajaram, A., Yeats, A., Ng’eno, N., Musonda, F and Mwau, G. (1999) “Putting the Horse before the Cat: On the Appropriate Transition to An East African Customs Union”, a (final) report prepared for the East African Cooperation (EAC) Secretariat.

REPIM. (2001) “Rwanda: Review of Tax Policy and Tax Administration – Forecasts of Revenue to 2020”, Final Report presented to Ministry of Finance and Economic Planning, Republic of Rwanda, December 2001.

REPIM. (2001) “Tanzania: Review of Tax Policy and Tax Administration – Increasing Revenue”, a report prepared for the Ministry of Finance, the United Republic of Tanzania, January 2003.

Republic of Kenya (2003) Statistical Abstract, Central Bureau of Statistics, Ministry of Planning and National Development.

Republic of Kenya (2004) Quarterly Budget Review, Second Quarter 2003/04, April 2004 Edition, Ministry of Finance.

Republic of Zambia (2004) Budget Speech, delivered by the Ministry of Finance and National Planning, Hon. Ng’andu P. Magande, MP to the National Assembly on Friday 6th Februray 2004.

Reserve Bank of Malawi .(1998) Financial and Economic Review, Vol.XXX, No.4.

____________________. (1999) Financial and Economic Review, Vol.XXXI, No.4.

____________________. (2000) Financial and Economic Review, Vol.XXXII, No.3.

Smith, S.E. et al. (2002). “The Namibian Tax Consortium Report on Taxation in Namibia, December 2002”, a report prepared for Namibian Ministry of Finance.

Seade, J. (1990) “Tax Revenue Implications of Exchange Rate Adjustment, in: Tanzi, V (ed) Fiscal Policy in Open Developing Economies.

Sunley, E.M; Mani, M and Terkper, S. (2004) “East Africa Community: Investment Tax Incentives and Harmonisation” (unpublished report), International Monetary Fund.

Tanzi, V. (1988) “The impact of macroeconomic policies on the level of taxation (and on the fiscal balance) in developing countries”, IMF Working Papers, WP/88/95, Washington, D.C.

Tanzania Revenue Authority, http://www.tanzania.go.tz/tra.html.

United Republic of Tanzania (URT). (1996). Report on the commission on corruption (The Warioba Report), Dar es Salaam.

United Republic of Tanzania. (2004). “Vision of Future Direction of Revenue Policy”, Policy Analysis Department, Ministry of Finance, Dar-Es-Salaam.

Uganda Revenue Authority. ( ) Report for the Period July-August, 2003/04 .

World Bank. (1997) Tax Reform in Developing Countries, WB, Washington, D.C.

World Bank. (2003) “Regional Trade Integration in East Africa: Trade and Revenue Impacts of Planned Customs Union”, a Policy Note by WB Africa Region.

Zaake, J (2000) “Tax Reform Policies: The Experience of Uganda”, unpublished paper.