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Tax evasion and widening the tax base in Uganda

Author

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  • Sennoga, Edward B.
  • Matovu, John Mary
  • Twimukye, Evarist P.

Abstract

Uganda still lags behind in its tax collections at the domestic level. For most of the commodities the tax collection effort is not more than 5 percent relative to the statutory rate of 18 percent. This results into a situation where the government has to rely a lot on foreign financing. From the analysis, there is a lot of improvement where URA can be able to increase its tax effort. this could be achieved by targeting commodities that are under-taxed and excluding food items for equity purposes. Increasing domestic collection would also result into less over reliance on taxing a few commodities especially fuel which is interlinked with a lot of other sectors and could indeed harm growth in the long-run. We also find that the tax effort on imports is sufficient. However, import duties on fuel remain very high and this could be a symptom of the poor domestic tax collection.

Suggested Citation

  • Sennoga, Edward B. & Matovu, John Mary & Twimukye, Evarist P., 2009. "Tax evasion and widening the tax base in Uganda," Research Series 54802, Economic Policy Research Centre (EPRC).
  • Handle: RePEc:ags:eprcrs:54802
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    References listed on IDEAS

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    1. Watson, Harry, 1985. "Tax evasion and labor markets," Journal of Public Economics, Elsevier, vol. 27(2), pages 231-246, July.
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    3. Thalmann, Philippe, 1992. "Factor taxes and evasion in general equilibrium," Regional Science and Urban Economics, Elsevier, vol. 22(2), pages 259-283, June.
    4. Persson, Mats & Wissen, Pehr, 1984. " Redistributional Aspects of Tax Evasion," Scandinavian Journal of Economics, Wiley Blackwell, vol. 86(2), pages 131-149.
    5. Schneider, Friedrich, 2005. "Shadow economies around the world: what do we really know?," European Journal of Political Economy, Elsevier, vol. 21(3), pages 598-642, September.
    6. Allingham, Michael G. & Sandmo, Agnar, 1972. "Income tax evasion: a theoretical analysis," Journal of Public Economics, Elsevier, vol. 1(3-4), pages 323-338, November.
    7. Kesselman, Jonathan R., 1989. "Income tax evasion : An intersectoral analysis," Journal of Public Economics, Elsevier, vol. 38(2), pages 137-182, March.
    8. Ayoki, Milton & Obwona, Marios & Ogwapus, Moses, 2005. "Tax Reforms and Domestic Revenue Mobilization in Uganda," MPRA Paper 80328, University Library of Munich, Germany.
    9. Kehoe, Timothy J. & Serra-Puche, Jaime, 1983. "A computational general equilibrium model with endogenous unemployment : An analysis of the 1980 fiscal reform in Mexico," Journal of Public Economics, Elsevier, vol. 22(1), pages 1-26, October.
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    Cited by:

    1. Joseph Mawejje & Ibrahim Mike Okumu, 2016. "Tax Evasion and the Business Environment in Uganda," South African Journal of Economics, Economic Society of South Africa, vol. 84(3), pages 440-460, September.

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