By Grace Namugambe
Tax is an obligatory payment made to a State for which no direct benefit is provided in exchange.
While no direct benefit is expected by the taxpayer, tax can be used as a tool to promote development.
To this effect, taxes are levied to raise government revenue which enables government to provide social services and infrastructure for the citizens.
Beyond revenue, tax plays a redistribution role whereby collected revenues are directed towards the provision of basic social services especially for the poor and most vulnerable groups such as the women hence bridging the poverty and inequality gap.
Tax can be used to discourage activities or the consumption of goods and services that may be deemed socially undesirable.
Goods like cigarettes and alcohol are often taxed heavily because of their dangerous effect on health.
Alternatively, the government may decide to remove taxes on certain goods or services because of their cultural values, associated health benefits, or their social and economic impact and benefits.
For example, the government may opt to exempt medical supplies; sanitary towels as well as agricultural inputs to enable the citizens access them at affordable prices. This role of taxation is known as re-pricing.
Through taxation, citizens entrust the government with a share of their incomes and in return expect efficient delivery of services. This also gives citizens the right to engage with duty bearers to demand for accountability and further influence the allocation of resources to sectors which they feel are more critical for their development.
In Uganda, women comprise more than half of the total population. More still according to the 2017 UBOS statistics, women spend over 30 hours a week on unpaid domestic and care work, more than twice the amount of time spent by men.
Overall, the percentage of unemployed women which stands at 11 percent exceeds that of men which stands at eight percent.
Despite these statistics, the tax regime in Uganda does not exhibit any bias in the treatment of men and women despite the different gender roles they play. For instance, in the formal sector, women pay income tax the same way as their male counterparts.
More still, Uganda’s corporate tax regime is characterised by numerous tax incentives which deny the economy of revenue amounting to 4-5% of GDP.
Most of the incentives benefit the large male-owned enterprises hence subjecting the small women-owned businesses to heavy taxes on the meager profits they earn.
The revenue lost due to the award of numerous tax incentives limits the amount of funds available to provide the services such as maternal health care which are much needed by women.
Due to loss of revenue from the income tax regime, the government has had to immensely rely on indirect taxes such as Value Added Tax (VAT) which contributes up to 16% of the total revenue collections.
VAT exerts a gender bias because of women’s different consumption patterns.
Women in developing countries, Uganda inclusive tend to purchase more goods and services that promote health, education and nutrition compared to men.
This creates the potential for women to bear a larger VAT burden if the VAT system does not provide for exemptions, reduced rates or zero-rating for the basic household items and services.
With regards to allocation of revenue, many developing countries by comparison are spending less than 0.03 per cent of their Gross Domestic Product (GDP) on ministries that are focused on women’s rights and empowerment.
In the current FY 2021/22, government of Uganda allocated 3.2%, 10.9% and 5.1% of the budget to agriculture, education and health respectively as well as 3.2 % to water and environment.
The allocations to health and agriculture are way below the required 15 % in the Abuja declaration and 10% in the Maputo declaration respectively and are too low to match the needs of women.
Furthermore, most of the money allocated to these sectors is spent on recurrent expenditures rather than development expenditure.
As a result, women especially those in the rural areas are forced to trek long distances to access healthcare services, fetch water and collect firewood which increases the energy and time spent on unpaid care work hence depreciating their quality of life.
It is therefore important for countries to create a gender responsive fiscal system in order to achieve women’s rights despite the different gender roles.
This is achievable if the government recognises tax as a feminist issue and progressively raises domestic revenue to invest in the gender-responsive public services, social protections and infrastructure; ensures that tax and fiscal policies are designed and implement to recognize, represent, reduce and redistribute unpaid care work.
The government of Uganda should continue revising the loopholes within the laws to prevent tax dodging by multi-national companies and further limit the award of tax incentives and exemptions in order to increase the revenue available for allocation to social sectors that contribute to the achievement of women’s rights.
The government should be able to provide accountability on the collection, allocation and utilisation of the taxes collected.
Finally, women should take steps to influence the way revenue is mobilised, allocated and utilised to ensure that their rights are achieved.
Grace Namugambe is the Program officer, Financing for Development at SEATINI Uganda.