ABSTRACT
Uganda is a low-income country that has registered strong economic growth in recent years, averaging about 8 per cent since 1992. Tax reforms introduced in July 1996 have resulted in an increase in tax revenue from about 11 per cent of gross domestic product (GDP) in 1997-98 to 13 per cent in 2005, where it has remained. One of the key challenges facing government is how to increase revenues and generate the funding needed to eradicate poverty and pay for critical development investments, thereby reducing its dependency on foreign aid. Many Ugandans have not shared in the country’s economic growth and income inequality is growing. Poverty remains high, with about 31 per cent of the population living below the poverty line in 2005-06 (Ssewanyana and Okidi 2007). It is unclear, however, whether the country’s policy-makers view taxation as primarily a means of raising revenue or as a redistributive instrument.
