کمک های خارجی و درآمد مالیاتی در اوگاندا

This paper analyzes the tax revenue–aid relationship in Uganda using a framework in which fiscal targets and actual outturns differ. The results suggest that grants have a negative association with tax revenue but are offset by the positive association of loans to result in some modest increases in tax revenue in the long run. The coefficient on the per capita income variable suggests that the tax system is inelastic. The error correction model results capture, in a dynamic setting, the offsetting effects of per capita income on the one hand and aid on the other to result in stagnant tax revenue GDP ratio that has been observed in the recent past. Policies that reduce mutation of taxpayers and noncompliance will reduce the country's reliance on aid and its unwanted effects.

The shortfall between budgetary requirements and domestic tax revenue collection in the context of limited domestic financing options has led Uganda's economy to rely quite substantially in foreign aid. Uganda has been operating a fairly large and apparently unsustainable fiscal deficit over the last two decades, with deficits as a percentage of GDP peaking at about 14% in 2001/2002 before easing to about 6.5% in 2011/2012. The country's good record at macroeconomic reforms, however, attracted considerable donor resources to fund these deficits. Whereas increased donor aid inflows have been welcomed and even encouraged in some circles to help increase the pace at which some social targets can be attained, others have strongly argued that they complicate short run macroeconomic management and may generally not be sustainable in the long run (Brownbridge and Mutebile, 2007). This view contends that donor inflows can have many adverse consequences for the economy including putting pressure on the domestic price level (inflation) and domestic currency appreciation and debt sustainability. These in turn can hurt export competitiveness and stifle the role of the private sector in economic activity. These conceptual links between foreign aid and macroeconomic outcomes such as inflation, export competiveness and debt sustainability have been the subject of considerable empirical attention in Uganda (see Brownbridge and Mutebile, 2007, Hisali, 2012a and Hisali and Guloba, 2011). Whereas a number of the standard macroeconomic effects of aid have been studied in Uganda, evidence on the relationship between aid and taxation is largely not available. But, at a more general level the nature of the relationship is inconclusive since increased aid inflows may enhance or curtail the tax revenue effort of the recipient country. Tax policy reforms associated with donor conditionality can affect either the tax rates or the tax base or both. Intuitively, a huge debt burden arising from increased aid may ‘force’ recipient countries to find avenues of increasing total tax revenue in order to enhance their ability to repay the loans. Increased aid inflows may also enlarge the budget and may require an increase in tax revenue for sustainability. In any case, total tax revenues would increase. An opposing set of arguments contends that increasing donor inflows can actually result in a slowdown in total tax revenue growth. This is partly because increased aid may reduce the incentive to implement certain policies and other administrative actions that expand total tax revenue. In addition, certain policies associated with aid conditionality (such as international trade liberalization) can reduce the tax base and hence total tax revenue. This study sought to provide evidence on the relationship between aid inflows and tax revenue in Uganda. Examining Uganda's experience is particularly interesting because the period over which it received much of the aid initially coincided with an expansion in total tax revenue but which has now stagnated at levels below the sub-Saharan Africa average.1 The approach used in this paper explicitly recognizes the limited applicability of the widely used fiscal response models in situations where major disconnects exist between actual fiscal outturns and targets. The paper also endeavors to provide insights into the direct effects of aid on domestic tax institutions and structures, as well as indirect effects such as those mediated through donor conditionality. After the introduction, the rest of the paper is organized as follows. Section two presents an overview of the literature. Section three builds on the standard pathways to provide descriptive insights into the nature of the relationship between aid inflows and tax revenue performance in Uganda. The econometric methodology and results of the study are presented in section four followed by a summary and the policy implication in section five.

The relationship between tax revenue and aid receipts remains largely inconclusive. Technical assistance may directly support reforms necessary for increased revenue collection and a huge debt stock coupled with the future repayment burden should ideally ‘force’ fiscal authorities to implement reforms that enhance revenue collection. But aid also provides ‘free’ resources to support public spending and may in the process delay the pace at which domestic institutions for tax revenue collection develop. This study contributes to the debate on the tax revenue–aid relationship using Ugandan data over the 1993 and 2011 period. Whereas aid has enabled the country to fund its priority programs without recourse to borrowing from the domestic banking system or even having to increase tax rates, it has had undesirable consequences as well. Other than the usual problems associated with huge debt stock, the liquidity management operations that have been associated with aid inflows in Uganda have kept interest rates artificially high which has undoubtedly slowed the expansion of private investment and by implication the tax base. In general, the stagnant tax revenue share for the last one and a half decades appears to suggest that the contribution of aid (through technical assistance, for example) to tax revenue has been offset by its second order effects. The econometric analysis provides a clearer picture. The long run results show some modest increases in tax revenue in spite of the fact that the positive effect of loans gets partly offset by the negative effect of grants. The per capita GDP coefficients in the short run specification appear to provide insights into problems of mutation of taxpayers and noncompliance which offset the effects of increased income on tax revenue collection. There is also evidence that the incentive and disincentive effects of aid on tax revenue turn out to be offsetting in the short run. The behavior of per capita GDP and aid coefficients appears to mimic Uganda's largely stagnant tax revenue GDP shares over the last one and a half decades. The results point to the need to address loopholes in the tax system that some sections of the taxpayers take advantage of continuing mutating and evading taxes. Strengthening the recently created business intelligence arm of the Uganda Revenue Authority is one possible option. This will increase the pace at which aid receipts are reduced and together with it, reduce disincentive (and other) effects of aid.