Tax Revamp Needed to Spark Uganda's Economic Engine, Experts Say

Business
Tax Revamp Needed to Spark Uganda's Economic Engine, Experts Say
A receive machine

Economic experts are urging the Ugandan government to overhaul its tax policies, arguing the current system hinders economic growth and discourages participation.

Professor Wasswa Balunywa, a former business school leader, criticizes the existing framework for creating barriers for both citizens and businesses. He emphasizes the need for a broader tax base that doesn't stifle economic activity.

"The current system stagnates at a 20% collection rate," Professor Balunywa explains, "Many remain outside the formal system. We need to expand the net while ensuring taxes don't strangle business."

Public frustrations with tax rates have boiled over into street protests and strikes, with traders particularly critical of the Electronic Fiscal Receipting and Invoicing Solution (EFRIS). They view it as overly complex and burdensome.

Professor Balunywa warns that excessively high taxes can backfire, leading to tax evasion and reduced revenue collection.

"When taxes feel too high," he says, "people seek ways to avoid them. This hurts the economy."

The expert proposes exploring alternative revenue streams and offering incentives for compliance, all while striking a balance between generating income and fostering economic sustainability.

Traders echo this sentiment, arguing for a broader tax base rather than squeezing existing contributors.

As the debate on tax policy intensifies, Professor Balunywa and others advocate for a more inclusive and business-friendly approach. Their hope is that a revamped system will not only boost government revenue but also create a thriving business environment that propels Uganda's economic engine forward.

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