This paper focuses on the requirement to increase government revenue in Uganda and the ways various taxes have responded to the changing economic environment. Specifically, the paper looks at the tax reforms implemented by the government and how revenue yields of individual taxes and the overall tax system have responded to changes in GDP (or proxy bases).

Methodology:

We computed elasticity and buoyancy indexes for the pre- and post-reform periods as well as the combined period, based on primary data from the Uganda Revenue Authority, Uganda Bureau of Statistics, Ministry of Finance, Planning and Economic Development, and Bank of Uganda.

Empirical results:

Empirical results suggest that tax reforms had a positive impact on direct taxes and VAT/sales tax, as evidenced by an increase in tax-to-income elasticity:

Direct taxes: from 0.706 to 2.082

VAT/sales tax: from 1.037 to 1.306

Deterioration in import duties:

The yield of import duties deteriorated after the reform, as shown by a decline in the tax-to-income elasticity index: from 1.256 (pre-reform) to 0.382 (post-reform).