Oxfam in Uganda has called upon the government to strengthen tax measures on High-Net-Worth Individuals (HNWIs) to end inequality in Uganda. According to Oxfam, taxing the rich benefits the most vulnerable twice; once from reduced pressure from the regressive taxation, which hits them hardest, and also from improved public spending.
This recemmendation was made during the National Tax Symposium hosted by Oxfam and partners, where a paper on Widening the Tax Base of Low Income Countries with a case of taxing high net worth indivuduals in Uganda was presented.
The paper highlights that it is practically and politically feasible to increase government revenues by increasing the tax take from the richest individuals in society. Within the first year of implementing the initiative of Taxing High Net Worth individuals, URA registeredincreased revenue collection by UGX 19.7billion (ApproxUS$5.3million) in rental tax, PIT, VAT, and stamp duty (by June 2016). By the end of financial year 2021/2022, UGX160.9Bns (Aprox US$ 44M) had been collected.
Speaking at the National Symposium, Oxfam in Uganda Country Director, Francis Shanty Odokorach said that; “As a country, we have faced many unprecedented crises, from floods, drought, and elevated and persistent inflation with food and energy price shocks coupled with less expansionary fiscal policies. This has widened the inequality gap and needs urgent attention if we are to build a more inclusive future, support a just recovery from the past shocks and build resilience to possible future shocks. Oxfam is thus calling for the taxing of the super-rich and big corporations as the door out of today’s overlapping crises.”
According to Francis, the Oxfam in Uganda paper speaks to the narrative and call from our global report, Survival of the richest that was recently launched.
According to the report,the richest 1 percent grabbed nearly two-thirds of all new wealth worth $42 trillion created since 2020, almost twice as much money as the bottom 99 percent of the world’s population. According to the World Bank, extreme poverty increased in 2020 for the first time in 25 years. At the same time, extreme wealth has risen dramatically since the pandemic. The billionaire class is $2.6 trillion richer than before the pandemic, even if billionaire fortunes slightly fell in 2022 after their record-smashing peak in 2021. The world’s richest are now seeing their wealth climb again. The report shows that 95 food and energy corporations have more than doubled their profits in 2022. At the same time, at least 1.7 billion workers now live in countries like Uganda where inflation is outpacing wages, and over 820 million people —roughly one in ten people on Earth— are going hungry.
“While ordinary people are making daily sacrifices on essentials like food, the super-rich have outdone even their wildest dreams,” said Gabriela Bucher, Executive Director of Oxfam International. “Taxing the super-rich is the strategic precondition to reducing inequality. We need to do this for innovation. For stronger public services. For happier and healthier societies. And to tackle the climate crisis, by investing in the solutions that counter the insane emissions of the very richest,” said Bucher.
“Taxing the rich is a fair way to reduce income inequality and to fund critical public goods and services such as education, healthcare, and infrastructure.” Francis Shanty Odokorach, Oxfam in Uganda Country Director.
Oxfam is calling for:
- A systemic and wide-ranging increase in taxation of the super-rich. Decades of tax cuts for the richest and corporations have fueled inequality, with the poorest people in many countries paying higher tax rates than billionaires.
- Strengthen data collection and analysis: The government should invest in the development of a more robust system for collecting and analyzing financial data on HNWIs. This could include increasing the use of financial intelligence and strengthening partnerships between government Ministries Departments and Agencies, and collaboration with other countries to share information on financial transactions originating from tax havens and offshore companies
- Increase the technical capacity of tax officials: The government should invest in training and capacity-building for tax officials to ensure that they have the skills and resources necessary to effectively tax HNWIs. This could include training on international tax laws and regulations, providing access to the latest technology and tools for data analysis and finally, adopting the best practices to enable tax officials to detect and investigate tax evasion and avoidance schemes.
- There is also a need for training through a mixture of on-the-job training, short courses geared toward addressing specific needs, informal networking events and secondments to other revenue authorities (OECD 2009). In SARS, for example, junior auditors were exposed to complex tax planning schemes as soon as they started working with the HNWI unit to build the capacity of lower-level staff. In addition, these officers frequently met their more experienced counterparts to discuss the various cases being handled by the unit.
- Close tax loopholes: The government should work to close the loopholes that allow HNWIs to avoid paying taxes. This includes expediting of the Tax Expenditure framework that subjects all Ugandans, regardless of their wealth, status and political affiliation, to a well-known selection criterion for tax exemption purposes clearly highlighting the spillover effect (benefits) to the economy, especially the vulnerable poor. Further still, the said framework should highlight how the benefits of such exemptions will be assessed in a long run if awarded.
- Collaborate with civil society organizations: The government should collaborate with civil society organizations to raise awareness of the need for HNWIs to pay their fair share of taxes and to advocate for policies and reforms that will help to have the wealthiest individuals pay their fair share