CSOs ask gov’t to come clear on growing inequality in public services, tax
Civil Society Organisations have asked government to come out to rectify the growing inequality among members of the public and different sectors in the country.
Addressing journalists on Wednesday, February 9, 2022, Nivatiti Nandujja the coordinator for the women rights program at Oxfam Uganda explained that the Commitment to Reducing Inequality 2020 Index report (CRI) ranked Uganda 143rd globally out of 158 countries in its commitment to reducing inequality and 38th out of 48 countries in Sub-Saharan Africa and sixth in East Africa only ahead of Burundi and South Sudan.
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“Uganda’s poor performance was exacerbated by COVID-19 pandemic which pushed millions of
Ugandans further into poverty and dramatically increased inequality,”Nandujja said.
She explained that in terms of public service spending which looks at the limited access to essential public services which translates into low service coverage and access, Uganda was spending only 9.7% of its budget on healthcare in financial year 2019/2020.
“About 55% of the population, had no primary healthcare coverage at the time, whereas 15% were paying more than 10% of their household budget to access healthcare, one of the highest rates globally, pushing millions into poverty as a result of out-of-pocket healthcare costs,”Nandujja said.
“Only 3% of children from the poorest 10% of the Uganda population completed upper secondary education. During the COVID-19 pandemic, Uganda had the longest school closure, which increased other social inequalities. Learners from wealthier families adjusted to online learning, which was not a possibility for millions of others from poor households.”
She added that in February 2021, 75% of households from the richest 20% of the population of Uganda had children engaged in some form of learning, whereas only 39% of learners from households of the poorest 20% were engaged in some form of learning.
The CSOs explained that extreme low access to social protection benefits indicated that only 6.6% of elderly Ugandans had pension coverage compare to the 24.8% coverage in Kenya.
Tax pillar
SEATINI Executive Director, Jane Nalunga noted that Uganda is collecting 17% of what it should from taxes two times less than Kenya whereas the VAT rate at 18% is slightly higher than the regional average.
“Overreliance on indirect taxes hurts the poor who pay higher effective tax. Nearly two-thirds of the Uganda’s total tax revenue comes from indirect taxes according to the United Nations University Government Revenue Database,”Nalunga said.
She noted that in Uganda, taxation reduces inequality at only 2% compared to Tanzania’s 11%; Kenya’s 7% and Ethiopia’s 3%.
“On the other hand, public debt is on the rise and is projected to have risen sharply by 12 percentage points to 49% of GDP in 2021, according to estimates from IMF/ World Bank Debt Sustainability Analyses 2020–21.”
The CSOs said debt servicing is constraining government investment in critical social sectors needed to build resilience and sustainability.
These gave an example of the year 2020 in which debt servicing accounted for 49% of the government tax revenue, 2.7 times more than government spending on health.
Way forward
The CSOs asked government scale-up investment in health, education, and social protection to protect the vulnerable and enhance resilience to future shocks.
They for example asked government to increase its health budget to at least 15% of total government expenditure to reduce high out-of-pocket healthcare costs.
“Government should also work towards achieving universal health coverage. The education budget should be increased to at least 20% of the national budget, and the social protection budget should also be scaled-up,” said SEATINI’s Jane Nalunga.
According to Sarah Achen, the program coordinator for women right access to justice at UWONET, government should intervene in the labour market to protect the most vulnerable segment of the workforce but also enact the long-overdue minimum wage.
