Equitable taxation and efficient revenue mobilization

lessons from Uganda
This project analyses administrative tax data to deepen our understanding of tax and spending policies in African countries, specifically Uganda. It will provide knowledge for better policy-making with respect to mobilizing public revenue for inclusive economic development in developing countries.

Developing countries have increased their tax revenue, but overall revenues have often remained too low to sustain provision of crucially important public goods. In addition to pursuing development objectives, public revenue is often used to reduce inequalities, combat poverty, and provide social services.

This project explores the system-wide impacts of tax and spending systems in Africa, especially in Uganda. It aims to conduct new, policy-relevant research based on the empirical analysis of administrative tax data in partnership with the Uganda Revenue Authority. The research outputs of the programme are intended to assist policymakers as they develop and implement policy tools to improve development prospects in their country. An important additional goal of the programme is to build institutional and individual capacity to use administrative data for ongoing economic research and policy calibration.

Key questions
  • Do tax administrative reforms improve tax compliance and revenue collected from small businesses?
  • How have wage-earners and individual business owners responded to the personal income tax reform? How did this reform influence tax revenues?
  • How much taxes do domestic firms versus multinationals actually pay and can we estimate the extent of international profit shifting?
  • What are reliable estimates of tax elasticities in Uganda and how can we use these to estimate optimal rates of taxation?
  • What is the incidence of various tax and spending policies and are the distributive consequences equitable?
Watch this space

UNU-WIDER collaborates with the research division of the Uganda Revenue Authority (URA), where administrative data, obtained directly from URA’s e-filing systems, can be accessed for research purposes. A Memorandum of Understanding (MoU) was signed in 2017 and the first research studies, which focus on the impact of tax policy on small and medium-sized enterprises and personal income tax reforms, will be finalized by the end of 2019.

All working papers, events, briefs, blog posts, and opportunities to engage relating to this project will be available on this webpage.

The ongoing collaborations with South Africa and Uganda using administrative tax data provide the backdrop for exploring the possibilities to widen UNU-WIDER’s work for other African countries.

UN’s 2030 Agenda for Sustainable Development

The project centrally addresses SDG1 (No Poverty), SDG8 (Decent Work and Economic Growth), SDG10 (Reduced Inequalities), and SDG17 (Partnerships for the Goals).

Achieving Sustainable Development Goals requires sound domestic revenue mobilization. Strengthening domestic resource mobilization, including through international support to developing countries, to improve domestic capacity for tax and other revenue collection is a declared target of the UN 2030 Development Agenda (target 17.1). This project contributes to the understanding of how to create a well-performing tax system, and how to use administrative data in this process.

The legitimacy of the tax system rests on the transparent provision of relevant public goods, particularly social protection for the least well-off. Therefore, tax capacity is closely linked to the ability of governments to offer better public services to end poverty (SDG 1), reduce inequalities (SDG 10), and ensure sustainable economic growth (SDG 8). 

 

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Main subject

Theme: Current programme