According to Ramathan Ggoobi, the permanent secretary in the Ministry of Finance, Planning and Economic Development, Uganda holds the distinction of having the second lowest tax burden in East Africa, positioning it among the countries with the lowest tax obligations globally.
Ggoobi disclosed that Uganda’s tax burden currently stands at 11.8%, earning it the 140th position among 170 countries worldwide. Remarkably, the only East African nation with a lower tax burden is Tanzania, registering at 11.7%, securing the 141st spot.
This revelation surfaced during the release of sh7.687 trillion to finance government expenditure for the fourth quarter of the 2023/24 financial year, which took place on April 12, 2024.
Data from the Heritage Foundation, which assesses tax burdens globally, indicates that Kenya’s tax burden stands at 17.4%, positioning it at 93rd place, while Rwanda follows closely at 17.1%.
In contrast, developed nations typically exhibit higher tax burdens, with countries like Denmark, France, Belgium, Sweden, Italy, and Cuba topping the list with percentages ranging from 41.3% to 46.3%.
Ggoobi emphasized the importance of tax revenues in funding public services, expressing concern that the lack of adequate revenues impedes the visibility of the benefits derived from taxes.
Ishmael Magona, the acting director of budget at the finance ministry, underscored the significance of timely fund disbursement, aiming to prevent instances of returned funds due to late releases, a challenge encountered in the past.
Tax experts highlight that tax policies play a crucial role in shaping economic outcomes, often influencing winners and losers within the economy. A well-designed tax system should strive for neutrality, ensuring that taxes are applied consistently and equitably, thereby minimizing their impact on economic decisions.
