Angella Penelope Nansamba
The census is a crucial tool for gathering social and economic data about the population. Uganda’s population has grown from 9.5 million in 1969 to 34.6 million in 2014 and reached approximately 48,582,334 in 2023.
The population density is 243 people per square kilometer, with a median age of 16.3 years. The GDP per capita increased from Shs 3,500,000 in FY 2020/21 to Shs 3,722,000 in FY 2021/22. The primary purpose of the census is to streamline government planning, resource allocation, policy making, and broadening the tax base. However, the effectiveness of Uganda’s fiscal policy has been hindered by flaws in the census questions.
Fiscal policy relies on government spending and taxation to influence the economy. Efficient, fair, and growth-supportive tax systems are essential for achieving economic objectives such as controlling inflation, stimulating growth, reducing unemployment, and achieving equitable income distribution. Government spending plays a crucial role in managing economic activity, with adjustments in expenditure on public services, infrastructure, and welfare programs stimulating growth and reducing unemployment. Effective government spending enhances productivity, fosters long-term development, and improves the overall standard of living.
Despite Uganda’s population growth, the government has struggled to address the flaws in the census questions due to the approach used to conduct the census. The current process relies on face-to-face interviews, where enumerators visit households within assigned areas to administer the questionnaire to the head of the household. This method is time-consuming, prone to errors, and leads to data inaccuracies. The recently concluded census likely only collected data from 2 percent of the intended 80% of households, which is insufficient for broadening the tax base.
Additionally, poorly designed census questions hinder the effectiveness of fiscal policy. The questions do not target broadening the tax base. Including detailed demographic questions in the census is crucial for shaping effective fiscal policy, ensuring accurate resource allocation, informing taxation, planning public services, identifying areas of need, and informing budgetary decisions. Questions should address residence, source of income, and migration to understand population distribution and socio-economic outcomes. For example, determining the number of tenants and landlords and their contribution to rental income can help identify tax evasion and inform government actions to realize the intended revenue.
Uganda has a significant informal sector, which is not exempt from tax liabilities. The government has focused on traditional tax enforcement methods like trading license fees and market stall fees. Through the census and understanding national employment, the government should implement schemes like simplified tax regimes or amnesty programs to encourage informal businesses to formalize their operations in exchange for benefits or tax incentives. Additionally, the government should promote voluntary compliance, provide support services to informal businesses, and address factors driving informality, such as limited access to formal employment and financial services.
The flaws in Uganda’s census questions have significantly undermined the country’s fiscal policy. To address this, the government must adopt innovative data collection methods such as online self-submission platforms and offer incentives like free data and airtime to improve accuracy and participation. Census questions should be restructured to address residence, source of income, and migration. Implementing strategies to encourage voluntary compliance and formalizing informal sector businesses is also essential.
Ms Angella Penelope Nansamba,
team leader, Tax Policy and Compliance
Kalikumutima & Co Advocates.
