Tax evasion or public service frustration?

For a whole week, traders around the country closed their shops because of a new tax verification system called the Electronic Fiscal Receipting and Invoicing Solution (EFRIS) introduced by the tax authority.  

The recent traders’ strike single incident made clear the absolute lack of willingness of many people to pay their taxes transparently, and it highlighted the fact that many people evade payment of taxes. 

Yet we all know that it is these taxes that are supposed to be used to provide public services for the population. With the suspension of aid and loans from the World Bank and other economic downturns that resulted from local and international economic shocks from the recent past, now more than ever, we need to pay our taxes. But this is only the theoretical conclusion. 

The true cause of non-compliance with tax obligations is more often than not, poor public service delivery and blatant wasteful expenditure by governments. 

A few weeks before the protest by the traders, the media was awash with stories of the extravagant expenditure of members of parliament. 

The consequence of such corrupt tendencies coupled with poor service delivery results in the inevitable consequence of low tax fidelity, where people do not wish to comply with their tax obligation simply because they do not see the value in doing so.

The quality and availability of public services are fundamental for tax payment compliance. It is the ultimate solution to non-compliance and protests such as the one recently experienced in Uganda. 

.Economic stability is important for any developing country because for all the hardship we have to endure, we are not willing to tolerate economic oppression. One of the largest ever protests in the country happened in 2011 when an increase in fuel prices resulted in a protest dubbed “Walk to Work”. 

Masses walked from their homes to their workstations because of the failure of the government to regulate fuel prices. Economic hardship can be a trigger cause for major political unrest. 

In a country with civil political oppression, it is clear that the most important thing for the masses is their ability to put food on their tables. Tax fidelity is therefore vital if the political stability of the nation is to be maintained.

But to build confidence in the taxation system, it is also important to demonstrate fairness and non-discrimination. Uganda has one of the most generous tax incentive systems for foreign investors.

This is usually at the cost of local traders and corporate workers who end up paying high taxes because of the presumption of likely returns from the foreign investment. 

Research has shown that tax incentives are not yielding the intended results but rather creating cheap minimum-wage employment and low-quality products. 

The true cost of these foreign investor tax incentives is the feeling of unfairness that those who are left to bear the brunt of taxation end up facing.

It is unfair to see people protest Efris and simply conclude that they merely wish to evade taxes. The actions of the traders are a response to an inconsiderate system that has over time been unfair to them and a government that has failed to protect the money they are given to ensure the provision of public services. Addressing those concerns can increase tax compliance.

Jamada Musa Kalinda, final-year law student at Makerere University. 
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