Budget: Listen to the taxpayers
What you need to know:
The issue: Budget
Our view: ... it is important to improve tax administrative measures, given the critical need to generate resources to fund the development plans as the country targets tenfold development.
As the country prepares for the reading of the 2025/26 budget, which has been adjusted four times since February 2025, the populace is waiting to hear how the government mobilises the resources. The budget estimates have been increased from Shs57.4 trillion to Shs72.7 trillion, with additional expenditure on Parliament, fertilizer factory, nuclear medicine, and paying for Buganda land. According to the secretary to the treasury, Mr Ramadhan Ggoobi, the government is banking on increased domestic revenue collections as well as budget support.
But what sticks out clearly is the lack of collaboration between tax collectors and taxpayers. The raging disparity paints a picture of a collector whose duty is to build this country, and a taxpayer who is trying every avenue to dodge. But this collection heavily depends on small and medium-sized enterprises (SMEs), which make up more than 90 percent of the private sector and contribute significantly to the resource envelope.
These small SMEs have raised the issue of disparities and the burden the tax collector puts on them, saying the structure, administration, and enforcement of taxes disproportionately burden small businesses, stifling their growth and pushing many into informality. The SMEs have raised the issue of unfair taxation and limited access to cheap credit as key impediments to the progress of SMEs in the country, citing complex regulations, high tax rates, limited support systems, and inequitable enforcement practices.
This includes multiple taxes such as income tax, value-added tax (VAT), withholding tax, and local service tax, and trading license fees, among others, with each coming with its own registration requirements, which the small businesses are finding tedious and a burden, complicated by the punitive penalties from URA.
Therefore, the government should ensure the tax system creates a level playing field to build up compliance. If small businesses are taxed heavily and are driven out of business, it will have an overall effect on the resource envelope. A recent report shows that Uganda has persistently lagged behind its regional neighbours regarding tax revenue mobilisation.
A comparison with other countries shows that Uganda’s tax revenue to GDP, currently at 12.2 percent, is still below the Sub-Saharan Africa average of approximately 18.5 percent. Uganda lags behind its East African Community neighbours, such as Kenya (15.1 percent) and Rwanda (14.6 percent), in 2018/19.2. Therefore, it is important to improve tax administrative measures, given the critical need to generate resources to fund the development plans as the country targets tenfold development.
