Drawing on administrative tax records, household survey data, and an original review of policy documents, this paper provides a comprehensive assessment of Uganda’s tax performance since the 1990s. Despite two decades of almost continuous reform—including the 1997 Income Tax Act, the creation of the semi-autonomous Uganda Revenue Authority (URA), and the 2012–13 progressive personal income tax overhaul—Uganda’s tax-to-GDP ratio has stagnated at ~13%, well below the 18% East African average and far short of domestic financing needs.

Three dimensions of under-performance:

We decompose this under-performance into three dimensions:

Tax potential and effort: Micro-simulations and C-efficiency ratios indicate that collections could rise by at least one-third without new legislation merely by closing compliance gaps in PAYE, VAT, and corporate income tax.

Distributional outcomes: Fiscal-incidence analysis shows that Uganda’s combined taxes and transfers reduce the Gini coefficient by only 1.2 points and leave the poverty headcount virtually unchanged; indirect taxes and thinly targeted subsidies render the poorest 40% net payers into the fiscal system.

Political-economy constraints: Qualitative evidence reveals that political interference in URA governance, fragmented central-local administration, and weak property taxation in the informal sector blunt enforcement and erode taxpayer trust.

A rare success:

The 2012–13 reform offers a rare success: raising the top marginal rate from 30% to 40% on monthly incomes above UGX 10 million generated an extra UGX 206 billion (≈ US$57 million) annually while leaving top-earner labour supply largely intact, demonstrating that progressivity can be both revenue-positive and administratively feasible in low-income settings.

Conclusion:

We conclude that Uganda epitomises the broader paradox facing poor countries: revenue potential exists, but realising it requires not only technical fixes—digital invoicing, taxpayer segmentation, and risk-based audits—but also deeper institutional reforms that shield the revenue authority from political capture and broaden the tax net to encompass land, property, and informal-sector incomes.