Researching the politics of development



The politics of taxation in Uganda: The role of Uganda Revenue Authority

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Working paper 174

Sam Hickey

Since being granted semi-autonomous status in 1991, Uganda Revenue Authority (URA) has sometimes appeared to operate as a ‘Pocket of Effectiveness’ (PoE) whilst at other times suffering from political neglect and/or interference. Most observers argue that URA was effective in the first years of operation (1991-7) and then again from 2005-2012, when URA received the type of political support, leadership and capacity-building associated with being a PoE. These periods also saw some improvements in some key performance indicators, although overall Uganda remains a comparatively poor performer in terms of its tax-to-GDP ratio, which remains the lowest in the region. A political settlement analysis can capture much of this variation in URA’s performance. A full alignment of the three key drivers of revenue authority performance (political commitment, an enabling policy environment and organisational leadership) only occurred under the ‘dominant developmental’ ruling coalition of the early 1990s. As political settlement dynamics shifted in the 2000s, with the ruling coalition facing growing challenges along horizontal and vertical dimensions of power, the President’s commitment to institution-building waned. Tax policy became increasingly politicised in ways that directly undermined URA’s best efforts to improve revenue-generation, including during the much-celebrated period following the appointment of a particularly dynamic commissioner general in 2005. Over a three-decade period, then, URA’s uneven performance trajectory has been defined by the shifting level of political commitment to both tax policy and tax administration reforms, with even high-performing organisational leaders unable to overcome the wider constraints imposed by Uganda’s increasingly vulnerable and populist political settlement.