Taxation without services is tyranny

By Mutabazi Sam Stewart

The level of development of a country is determined by the wealth of its people. The richer the people the more likely the richer the country and the reverse is also true. Accordingly therefore, Uganda is a poor country because its people are poor. The debate about which solutions are most effective in the fight against poverty in Uganda are as interesting as they are confusing to the population.
Ugandans seem to be split between accepting the declared rosy figures of poverty reduction during the 22 years of the NRM government and the actual reality of the not so comfortable standards of living of majority of people both in the countryside and in towns.
Independent minded observers rightly think that the current government has to a great extent transformed the economy. A big number of "bourgeoisie" (middle class) has been added to the meager group that existed prior to 1986.
This argument is further enhanced by the evidence of the economic miracle brought forth by the carefully planned but wrongly executed policy of economic liberalization that has made the private sector especially in a few urban centres buoyant than the situation was under the mixed economy before 1990. But the question that continues to bother many people is; what have the taxes we've been paying all these years done? There is no medicine in hospitals, many roads are impassable, including those in the city centre, costs of education are about to run people nuts.
And wait a minute; the parliament just recently approved a new tax - the local service tax - that will further milk the already emaciated folks of the Ugandan public. The introduction of that tax could have come at a worse time when workers both in the formal and informal sector are reflecting on their plight.
Government revenue through taxation has more than tripled since 1986, excluding grants from development partners. Uganda's total revenue collection in 1986 was approximately 900 million dollars as compared to the current 3.5 billion dollars.
Whereas the total debt burden for the country was about 800 million dollars in 1986, it now stands at a whopping 4 billion dollars in spite of the fact that Uganda was recently one of the few Highly Indebted Poor Counties (HIPC) that benefited from massive debt cancellation arrangement from the Paris group of creditor nations where up to 4 billion dollars of its external debt was rescinded.
People everywhere do not like paying taxes. It is bad when such taxes are direct. It is worse when majority of the people have a perception that the taxes they pay are not being put to good use.
Although in economic terms a tax is a non quid pro quo (amount paid is not necessarily equal to service rendered) payment, it is supposed to be an unstated agreement, that the money they pay should be comparable to the services they receive.
It may make unpleasant reading to you that while you have been suffering under the weight of new taxes, a lot of this is being used to support an unsustainable and quite ineffective size of public administration.
Structural Adjustment Policies (SAPs) by the IMF and the World Bank resulted into the loss of jobs for many ordinary Ugandans who were supporting hundreds of ordinary people.
That however failed to stop the growth of government's expenditure. On the contrary, the size of Uganda's public administration has not only become a point of ridicule but of immense pain to Ugandans who are having to dig deep in their pockets to support it.
The only difference was that public enterprises, though not profitable did not require enormous budgets from government to sustain themselves.
Although government extended subsides to these companies in form of grants and tax waivers, the situation could not be compared to the current scenario where government has to foot the total cost of maintaining new institutions. The cost of running these departments has to be solely bone by the tax payer.
In the current situation of an almost stagnant economy and increased prices for most commodities, the low income earners have to bear the full brunt of spending more in form of taxes amidst static wages.
The creation of more districts, slots for members of parliament, more statutory bodies has further compounded the situation. Local governments at district level have pressured government into reintroducing graduated tax, now called Local Government Tax.
This reminds me of a quotation by the famous writer Henry Mencken that "When a new source of taxation is found it never means, in practice, that the old source is abandoned. It merely means that the politicians have two ways of milking the taxpayer where they had one before".
It is true that most districts (old and new) are suffocating due to low revenue. Even the poorest districts expect to squeeze their already impoverished residents to pay this tax in order to pay innumerable district staff that hardly have any purpose apart from attending workshops and meeting and reading newspapers.
Most of the districts especially the new ones are facing a bleak future even after the introduction of the new local service tax. Many are just not viable. It is a matter of time that they ask the central government to re-annex them.
The current status where districts cannot provide services to their people but spend the largest percentage of their revenue to pay their salaries is frightful and a recipe for economic pestilence for the whole country.
Taxation, just like medicine, is only good when administered in moderation; its consequences can be catastrophic when the patient (read people) is forced to take an overdose.


Published May 02, 2008. The writer is a human rights activist:mutasamste@yahoo.com Tel: 0772-882547

OTHER REGIONS ARE NOT BUGANDA’S CONCERN!

By Salongo Emmanuel Muwanga

SIR— For quite sometime, several people have expressed opinions against Buganda’s proposals, especially on federo (federalism). Sam Stewart Mutabazi in the guest writer’s column of your August 24 edition, page 11, makes a number of arguments. Firstly, he says although federo will uplift Buganda, only Buganda will gain from this type of governance while the rest of Uganda has everything to lose. Secondly, he argues that the federo agitators in Buganda are not “nationalistic” because they don’t explain its effect on the rest of Uganda. I wish to emphasize that Uganda is not a nation and nationalism should not be seen in Uganda’s context only but in the context of the nations that make up the state of Uganda. When Baganda urge for federo, they are fighting for their nation, Buganda. How federo affects the other regions (Mutabazi seems to suggest economic effect), is not the responsibility of Baganda but of the people s of these other regions. All regions should strive to uplift themselves, and the earlier they realise this, the better. Thirdly, Mutabazi argues that federo can’t ensure that resources flow from richer Buganda to poorer regions. Now, does Buganda owe these other regions a living? What right do the poor regions so-called have to milk Buganda for their own development? Fourthly, Mutabazi says Mengo is not explaining the role it wants the Kabaka to play under federo. In my view, the Baganda know the role they want the Kabaka to play. Non-Baganda like Mutabazi should not be bothered because the Kabaka will never have power in their regions save only in Buganda. When I read opinions like those of Mutabazi and many more, I come to the conclusion that all other regions want to be parasites on Buganda and that Buganda should be milked in order to develop other regions. That is the main cause of the hatred towards Buganda. The scenario is not sustainable, a t least in the long term.

Salongo Emmanuel Muwanga Ndejje - Kyaddondo Wakiso District
Published on: Saturday, 4th September, 2004