Browsing by Author "Waiswa, Ronald"

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    An assessment of presumptive tax in Uganda: Evaluating the 2020 reform and four alternative reform scenarios using UGAMOD, a tax-benefit microsimulation model for Uganda
    (WIDER Working Paper., 2021-11-12) Waiswa, Ronald; Lastunen, Jesse; Ayo, Joseph Okello; Nalukwago, Milly; Barugahara, Tina; Rattenhuber, Pia
    Presumptive tax, a final tax on business income, was introduced in Uganda in 1997. The latest reform to the regime in July 2020 sought to make the system more progressive, simpler and fairer to small firms. In this work, we evaluate the reform, focusing on its revenue implications based on simulations using UGAMOD, a tax-benefit microsimulation model for Uganda. Our findings suggest that, assuming full compliance, the reform reduces tax revenue potential by between 48-72 per cent from the previous rules. Interviews with staff at the Uganda Revenue Authority point to further challenges with the new rules, including slow implementation, ineffective enforcement and enduring complexity. To address these concerns, we modelled a number of hypothetical reform scenarios, including a 1 per cent and 1.5 per cent flat tax regimes for small businesses with turnover between UGX10-150 million. A low flat tax rate would be a major improvement to the existing presumptive tax regime, as it satisfies the calls for further simplification, is estimated to generate more short-term revenue than the current regime based on the modelling, and has realistic potential to attract more presumptive taxpayers over time.
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    Distributional effects of the COVID-19 pandemic in Uganda
    (WIDER Policy Brief, 2021-04-15) Lastunen, Jesse; Waiswa, Ronald; Ayo, Joseph Okello; Kaidu, Tina; Kavuma, Suzan
    In 2020, the first wave of the COVID-19 pandemic caused an economic crisis that disrupted the Ugandan labour market. How large were the associated income losses across different industries and population groups? To what extent did the general tax-benefit system mitigate the adverse effects of the crisis? UGAMOD, the tax-benefit microsimulation model for Uganda, helps to answer these questions.
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    Do tax administrative interventions targeted at small businesses improve tax compliance and revenue collection? Evidence from Ugandan administrative tax data
    (WIDER Working Paper, 2021-01-15) Jouste, Maria; Nalukwago, Milly I.; Waiswa, Ronald
    This paper conducts an impact evaluation of the effects of two tax administration interventions-a taxpayer register expansion and education programme, and a new electronic filing system for presumptive tax-on the number of small business taxpayers and presumptive tax revenues in Uganda. Using a difference-in-differences approach and administrative data covering both presumptive taxpayers and comparable small corporate income taxpayers, we find that the number of small business taxpayers filing tax returns and presumptive tax revenues increased substantially after the interventions. We argue that the interventions complement each other because both interventions were established around the same years, and the taxpayer register expansion programme focused on not only registering but also educating taxpayers with regard to tax compliance. We analyse the cost-effectiveness of the taxpayer register expansion programme and find that the benefits outweigh the costs.
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    Income distribution in Uganda based on tax registers: What do top incomes say?
    (WIDER Working Paper., 2022-01-22) Jäntti, Markus; Nalukwago, Milly Isingoma; Waiswa, Ronald
    We use income data from tax registers at the Uganda Revenue Authority from 2011 to 2017 to estimate top income inequality, focusing on the very top-the top 1, 0.1, and 0.01 per cent of the income distribution. The focus on the extreme top is facilitated by access to population data on formal sector income. The microdata from tax registries, submitted monthly to the Uganda Revenue Authority by employers, are supplemented by national accounts and population data that are used for control totals. Our results suggest that over the period we examine, incomes became substantially more heavily concentrated at the very top of the distribution.
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    SOUTHMOD Country report Uganda
    (UNU-WIDER., 2020-05-15) Waiswa, Ronald; Ayo, Joseph Okello; Kavuma, Susan; Gemma, Wright
    Uganda is a landlocked country located in East-Central Africa with a population of about 45.8 million as of 2021 (World Bank 2023), and its capital Kampala is the largest city with a population of 1.68 million. Uganda’s economic performance was greatly affected by the COVID19 pandemic slowing down to a growth of 1.5 per cent in 2020, picked up in 2021 with a growth of 6.0 per cent, and the economy is expected to continue recovering with growth projected at 4.6 per cent and 6.2 per cent in in 2022 and 2023, respectively (African Development Bank 2023). The economic recovery was driven by strong expansion in the mining and construction sectors and a rebound of the services sector, particularly public administration and education.
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    Who Can Make Ugandan Taxpayers more Compliant?
    (Institute of Development Studies, 2020-09-05) Waiswa, Ronald; Akol , Doris; Isingoma, Milly Nalukwago
    The rate of occurrence of tax evasion is higher in Uganda than in the rest of East Africa. Where the taxpayer has latitude to decide whether or not to be compliant, as in the case of income taxes, Ugandans seem to be less compliant than other East Africans. Uganda collects less in domestic taxes than other countries in the region. For revenue, the Ugandan government depends more on customs duties, on taxes that are difficult to dodge, notably Withholding Tax, and on taxes where there are in-built incentives to comply, such as Value Added Tax (VAT). The framework for improving tax compliance consists of three broad channels: making it easier for taxpayers to comply (facilitation), enforcement and increasing trust (in the government, in its spending practices, and in the tax collection agency itself). Using this framework, we discuss the measures that have been adopted by the Uganda Revenue Authority (URA) and the Government of Uganda, the successes achieved and the gaps that remain. The URA is best placed for facilitation. It also plays a major role in enforcement, although its efforts may be either supported or undermined by the government and politicians. The URA can do little to increase trust in the government in general; that is principally a job for the government. The URA can mainly make itself more trustworthy in the eyes of taxpayers by being transparent and minimising corruption. We find that URA has been successful in facilitating tax compliance, although there are opportunities for improvements on its current initiatives. The URA’s enforcement actions are, however, weak and limited. To a large extent, they have been undermined by the government and politicians. Enforcement has also been weak, due to internal URA factors, such as the understaffing of the enforcement team and the fact that the URA does not take enforcement action as often on small taxpayers. Lastly, very little has been done to build taxpayer morale. There are widespread concerns over the poor use of tax money, missing or poor government services and some sections of society being shielded from paying their share, because of their connections or roles in government. The URA is also not highly trusted and corruption is still a major problem among tax collectors. To build trust in the government, the URA is undertaking some of the tasks of justifying tax collection that would normally be undertaken by another part of government. There is a lot of scope for both the government and URA to gain more trust from the taxpayer. Improving tax compliance in Uganda will require the government (in the sense of the executive) and the URA to work more together. The government should give more support to URA activities, desist from protecting non-compliant taxpayers and be accountable to the public for the revenues collected. The URA needs to improve its trust-building initiatives and address some internal weaknesses.