Gender and taxation: Evidence from Uganda Presented by Madina Guloba Economic Policy Research Centre International Association for Feminist Economics Annual Conference, June 26-28, 2009, Boston International Association for Feminist Economics Annual Conference, June 26-28, 2009, Boston

Background Tax as share of GDP has stagnated at 13 percent (Kenya 23% and Tanzania 16%). By June 2009, tax collections declined Donor support to the total national budget declined from over 50% since 1992 to about 30% in 2007/08. It is projected to increase to 32.6% in 2009/2010 due to the global economic downturn Uganda is faced with fiscal challenges in her efforts to mobilize and effectively utilize resources for poverty reduction GoU has recognized gender as a cross-cutting issue. And Govt. remains committed to gender mainstreaming in all its development initiatives International Association For Feminist Economics Annual Conference, 26-28 June 2009, Boston

Economic Policy Research Centre Cont.. Majority of the absolutely poor Ugandans are women, particularly those in the rural sector where 85% of the country’s population lives. Women account for 90% of Uganda’s domestic labour and contribute 80% of the agricultural labour. Women till the land they do not own, thanks to the vested patriarchal institution and cultural values. Overall, slightly over 1.8m males are employed in non-agricultural sector compared to about 1.1m females. Economic Policy Research Centre

Economic Policy Research Centre Data used Uganda National Household Survey of 2005/06 (UNHSIII) conducted by the Uganda Bureau of Statistics (UBoS) from May 2005 to April 2006. Administrative data: Uganda Revenue Authority (URA) –picked both direct and indirect tax data Ministry of Local Government (MoLG)-LST Economic Policy Research Centre

Taxation: % of tax by type in total government revenue

Incidence of indirect taxes PART A Incidence of indirect taxes Economic Policy Research Centre

Key findings: Incidence of non-zero tax by consumption category, % Consumption patterns vary across households and not all households spend on goods & services that attract tax - - MHH spend more on alcohol, tobacco & cigarettes, transport & communication than their female counterparts-- FHH spend slightly more on food than MHH HH tax liabilities Shs778bn per year, with 58.6% as VAT and 26% as excise duties

Incidence of tax by gender of head, % Regardless of type of tax, the incidence rate of tax is significantly greater for households with male heads compared to their counterparts with female heads. VAT imposes a greater tax burden compared to other indirect taxes

Incidence of tax by household employment status, % Households with male earners have a significantly higher tax incidence compared to households with female earners - households with dual earners have a higher incidence of tax than households with female earners

Findings: Gender differences in consumption VAT on Non-alcoholic beverages is progressive and true for both FHH & MHH. However, the incidence is significantly greater for households with male heads in higher income quintiles (Q4 &Q5) Alcoholic beverages, VAT is neither progressive or regressive; but incidence is lower for households in the poorest quintile than that of their counterparts in the richest quintile. Overall MHH incidence is significantly higher than FHH regardless of income levels. Similar results observed for tobacco & cigarettes except for Q3

Findings (contd.) Clothing and footwear – VAT less progressive but incidence turns out to be significantly greater on MHH compared to FHH Transport – VAT is progressive ; incidence significantly higher for MHH than FHH. Similar findings for communication category Miscellaneous – VAT is neither progressive nor regressive, household with females heads in higher income level has a significantly higher incidence than the male counterparts

Concluding remarks Regardless of household typology, female-type households have lower incidence rate of tax compared to their male counterparts . However, there are variations by tax type and consumption category. Tax incidence (especially excise duties) higher on MHH due to their higher consumption of goods that attract higher taxes including beers, sodas, tobacco & cigarettes; adult clothing & footwear; tax incidence on food higher for FHH

Personal Income Tax (PIT) PART B Personal Income Tax (PIT) Economic Policy Research Centre

Economic Policy Research Centre Findings In 2005/06, 15.5 percent of workers received less than half median income-low paid were mainly females. By sector, the proportion of paid workers in the private sector earn less than half the median income. Implying earnings for workers in the public sector are well above those in the private sector. Individuals employed in the public sector earn more than twice those in the private sector, at median. Employment in the public sector is predominantly for males especially in the higher levels of pay. Hence, female-male wage gap is wider in the private sector. Economic Policy Research Centre

Economic Policy Research Centre Nearly 42 percent of Ugandan households reported at least one salaried member, of these 55.2 percent had one male earner and 20.8 had only one female earner. About 22.3 percent of these households were female headed. 73.2 percent of the female headed households had one female earner. Over 50 percent of the households had one male earner Economic Policy Research Centre

Economic Policy Research Centre Table : Share of direct taxes in total earnings and Tax Incidence by HH earning type, 2005/06 Economic Policy Research Centre

Economic Policy Research Centre Hypothetical Scenario-Vertical Equity: Example 1: Total HH Income at 1.6m per annum Economic Policy Research Centre

Example 2: Total HH Income at 5.7m per annum Economic Policy Research Centre

Economic Policy Research Centre Cont… We note that one single earner households irrespective of gender bare a greater tax burden compared to dual earner – male high households with the same total annual household income. The tax burdens on both households are different because the tax burden falls on individuals within the households and not based on total household incomes. Uganda’s income tax system targets individual incomes and not total household incomes. The PAYE tax burden falls more on single earner HHs irrespective of gender than dual earner HHs. Economic Policy Research Centre

Conclusion and policy recommendations Because Uganda’s income tax system treats both women and men the same way, it is important to reduce gender gaps in terms of wage income and therefore increase women contribution to total personal income tax by promoting gender parity in; All professional training; Employment both in public and private sector; Political appointments; and Representation in Parliament & district councils. Economic Policy Research Centre

Economic Policy Research Centre Cont… Given that the tax structure hardly address fundamental gender inequalities, to a certain extent tax measures could be put in place to reduce gender inequality in terms of disposable income with a view to achieve substantive gender equality in the long run. Income tax preferences to women could include : Deductions for the number of children; this is on account that working women in Uganda take responsibility for the children under their care. Economic Policy Research Centre

Economic Policy Research Centre cont… Deductions for gender, or being a woman. The measure would increase disposable income for working women to enable them improve the wellbeing of their household members. Revise/adjust tax brackets based on inflation-this has not been done since 1992. Economic Policy Research Centre

Economic Policy Research Centre Cont.. Uganda’s practice of affirmative action in favour of women such as active participation in politics is good thus to concretize the benefits accruing to some women in paid employment, government should give preferential income tax treatment to women to enable them begin to close the gender gap between themselves and their male counterparts. Economic Policy Research Centre

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