Ugandan Tax Collection Hampered by Public Doubts on Government Spending, URA Admits

The Uganda Revenue Authority (URA) has acknowledged a growing challenge in its mission to collect taxes: taxpayers are increasingly questioning how their money is spent. This lack of trust in government expenditure is making voluntary compliance more difficult, according to Aggrey Kiziito, URA Assistant Commissioner for Compliance.

Speaking at a post-budget dialogue, Kiziito emphasized that while taxation is a social responsibility, citizens have a legitimate expectation that public funds will be utilized efficiently and visibly translated into tangible public services and improved living standards. The URA official stated that demonstrating prudent and transparent spending is crucial for fostering public confidence.

These remarks coincide with the rollout of Uganda’s largest-ever budget for the 2026/27 financial year, amounting to Shs84.39 trillion. A significant portion of this budget, over Shs45 trillion, is slated for domestic revenue mobilization, with URA targeting approximately Shs40 trillion in tax collections. This aggressive push for domestic revenue aims to reduce reliance on external financing.

Kiziito admitted that resistance from taxpayers often stems from concerns about corruption, wastage, and inefficiencies within government spending. When asked about their tax contributions, citizens and businesses frequently inquire about the direct impact and value their money will generate. This sentiment underscores a broader debate on the critical link between taxation and government accountability in Uganda.

The URA official welcomed the government’s stated commitment to expenditure efficiency and accountability, predicting that greater transparency would significantly boost voluntary tax compliance. He noted that when government prioritizes these areas, Ugandans are likely to be more willing to increase their tax contributions.

The challenge of public trust comes at a time when debt servicing constitutes a substantial portion of the national budget, consuming approximately Shs33.4 trillion in the current fiscal year. Uganda continues to face a low tax-to-GDP ratio, estimated between 13-14%, lagging behind regional targets and the Sub-Saharan African average, partly due to a large informal economy and tax evasion.

To bolster revenue, the government is focusing on digitizing tax administration, expanding the taxpayer base, and enhancing compliance monitoring. Kiziito concluded that achieving developmental goals requires a dual approach: citizens fulfilling their tax obligations and the government ensuring responsible and transparent resource management. Success in meeting the current budget’s revenue targets hinges not only on URA’s enforcement but also on its ability to assure taxpayers that their contributions yield measurable benefits.

Source: Nile Post