An assessment of the tax revenue collection strategies of local governments in Uganda: a case study of Mpigi District

Abstract

Since 2010, Uganda's tax to GDP ratio has been lower than the average of 31 African countries. In 2020 the ratio was 11.1% compared to 16.0% the average of the 31 African countries. The low tax to GDP ratio has affected the provision of public services throughout the country. This study attempts to assess the tax revenue collection strategies of local governments in Uganda, a case study of Mpigi District Local Government. The objectives of the study include: to assess the existing tax revenue collection strategies of Mpigi District Local Government; to identify the gaps in the tax revenue collection strategies of Mpigi District Local Government; and to suggest remedies to address the gaps of the tax revenue collection strategies of Mpigi District Local Government. The tax revenue collection strategies that were considered for this study were e-tax collection, outsourcing, tax billing and taxation at the source. A descriptive survey research design was adopted and quantitative data was collected from a sample of 113 employees using stratified simple random sampling method. The primary data was collected with the aid of a structured self-administered questionnaire that had a section on biographical information and another section measuring the perceptions of respondents on tax revenue collection strategies, rated on a 5-point Likert scale. Thereafter, data was captured and analyzed for descriptive statistics using SPSS software. The study revealed that out sourcing was the only existing tax revenue collection strategy in Mpigi District. Whereas outsourcing was embraced as a tax revenue collection strategy, there was need to train the tax revenue staff about some aspects. Although, Mpigi had District not adopted the e-tax collection, tax billing and taxation at source, it had taken strides to embracing them as evidenced by proportions of the tax revenue collection staff agreeing that sensitization and training about the strategies had taken place. The majority of the respondents agreed that e-taxation and tax billing, once embraced, would improve transparency in administration of taxes. The study recommended that the tax collectors and tax payers be sensitized about the benefits of tax revenue collection. Training tax collectors on various aspects should be conducted. Appropriate management and monitoring of the outsourcing strategy should be conducted to ensure more effective and efficient local government revenue administration. Finally, it is recommenced that measures are put in place to adopt the tax billing strategy; e-taxation strategy; and taxation at source.