Document Title: Tax revenue, Uganda’s case, Tax amendments in Uganda

Paper code: 13090

Tax revenue, Uganda’s case, Tax amendments in Uganda

Revenue is an increase in net worth resulting from a transaction. Government Revenue refers to the revenue of the government finance by means of participating in the distribution of the social products, which is the financial resources for ensuring the government to function (Gnangnon, 2017). The contents of government revenue have been changed several times. For general government units, there are four main sources of revenue: taxes and other compulsory transfers imposed by government units, property income derived from the ownership of assets, sales of goods and services, and voluntary transfers received from other units. There are two major categories of public revenue; Tax revenue and Non tax revenue.

Tax Revenue

Tax revenues are critical to sustainable development since they are almost the only resource in development, poverty reduction and delivering public services, in addition to increasing state capacity, accountability, and responsiveness to their citizens (OECD, 2014). However, many sub-Saharan African countries face difficulties in raising tax revenue for public purposes, perhaps owing to low per capita incomes, an economic base in subsistence agriculture, poorly structured tax systems, and weak tax and customs administrations (Afonso & Kazemi, 2017). Of course an automatic increase in tax revenue is generated from a large tax base which reduces the deficit or even produces a surplus that is welcomed to the public balance.

Tax revenue, which forms the dominant share of revenue for many government units, is composed of compulsory transfers to the general government sector. Certain compulsory transfers, such as fines, penalties, and most social security contributions, are excluded from tax revenue. Refunds and corrections of erroneously collected tax revenue have the appearance of transactions that decrease the net worth of the government unit imposing the tax. More accurately, they are adjustments that allow the excessive increase in net worth previously recorded to be corrected. As such, these transactions are treated as negative revenue.

Tax revenue is generated from taxes on chargeable income, capital gains and taxes on goods and services which include value added tax (VAT), Excise duty and taxes on permission to use goods or to perform certain activities for example operating a casino or lottery organizations.

Non-tax Revenue

All other types of revenue are frequently combined into a heterogeneous category of non-tax revenue. Non-Tax Revenue is the revenue obtained by the government from sources other than tax. The sources of non-tax revenue are, Fees, Fines or Penalties, Surplus from Public Enterprises,  Grants and Gifts and Special assessment of betterment levy which is a kind of special charge levied on certain members of the community who are beneficiaries of certain government activities or public projects (Kaka, 2020). For example, due to a public park in a locality or due to the construction of a road, people in that locality may experience an appreciation in the value of their property or land.