Treat tax payers with respect and dignity

By Nelly Busingye

The 2012/13 budget presented a number of options for domestic resource mobilisation such as imposing 10% tax on individuals with a chargeable income of sh120m and above per year.

However, this does not take away the fact that regressive taxes like VAT on water will affect those, who are already economically disadvantaged.

A regressive tax system is whereby lower income individuals pay a greater percentage of their income towards that tax than higher income counterparts.

True taxation helps to strengthen the legitimacy of the state and deepen the social contract between the government and their citizens.

However, when the citizens do not have an opportunity to infl uence decisions related to tax, it becomes increasingly hard to convince them to pay taxes. It would also be important to analyse the percentage of Ugandans earning 120million and above per year against the percentage of those earning less and at the same time paying indirect taxes.

Many citizens have expressed their discontentment on the VAT on water but silently wonder whether the Government will meet their end of the social contract by providing the needed services.

The distribution of the tax burden determines how a tax instrument can be used in achieving income redistribution.

If the Government is going to realize equitable distribution of income, then the tax burden must be borne by both low and high income earners based on their income. Further still the Government should create a more sustainable tax system. 

The tax policy should ensure that tax payers are treated with respect and dignity. Therefore, citizens have the right to know how taxes are collected and allocated. Without citizens, there is no tax revenue hence no service.

The Government has an obligation to account for tax revenue, by doing this they are able to build confidence and trust in citizens which would facilitate tax compliance but also enable citizens hold governments accountable.