Efficacy of Uganda’s graduated tax: The case of Moyo District.
Obudra, Baku Raphael
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This study was conducted to assess the efficacy of Personal Graduated Tax (PGT) as source of revenue for local governments to render services to the people and contribute to the development of the areas under their jurisdiction, in order to determine whether the tax should have been abolished or not, in view of the controversy surrounding it. The Study was conducted through analysis of the laws related to PGT, review of literature on the subject, field research through interviews with tax administrators and taxpayers, to assess their understanding and experience of the tax and attitude to it. The Study concludes that the taxation principle underlying PGT was not clear, as the nature of PGT was not clearly articulated. Hence, it was not clear whether PGT was income tax, property tax, service tax or development tax. It has also been concluded that PGT did not comply with the canons of taxation, and therefore, did not qualify as a good tax system, although it was a generally accepted tax, and it generated some revenue that complemented Central Government transfers to local governments, to enable them discharge their functions. Abolition of the tax, therefore, led to a financial gap for local governments that needs to be filled. Measures to enhance revenue generation by local governments and to improve on tax administration have been recommended. These are introduction of property tax instead of property rates, and vesting the jurisdiction of levying and collecting property tax wholly in local governments; transfer of responsibility for employment income tax to local governments; enhancement of grants from Central Government; and strict enforcement of local revenue administration laws.