Taxation refers to a system used by the government through levying assessment to obtain money from people, industries and organizations. It is not relatively permanent but also compulsory and does not guarantee a direct relationship between the amount contributed by a citizen and the extent of the government services provided to him or her.
Taxation is the only practical means of raising the revenue used to finance government spending on the goods and services that most of the people demand. Taxation as a practice dates back to early civilization. In Biblical times for example, people were required to pay one tenth of their crops to the king to be spent on helping the poor. In Uganda, taxation traces its roots in the Hut Tax that was introduced with the signing of the 1900 Buganda Agreement between the locals and the British colonial masters. The Hut Tax (of 3 rupees per annum and a gun tax of 3 rupees) was a local government tax whose principle objective was to attract citizens into monetary production, and to mobilize voluntary labor for the production of cash crops and minerals for export. With the advent of colonialism the payment of taxes had to be in cash. The first tax legislation in Uganda was introduced in 1919 under the Local Authorities Ordinances, later followed by the Income Tax in 1939. This was collected jointly with the tax from the governments of Tanzania, then Tanganyika, Zanzibar, and Kenya. This tax was mainly paid by the European and Asian residents who were in business or who were employed while the majority of natives remained tax-exempt since they were peasants.
After the creation of the East African High Commission, the states shared a number of tax departments and were jointly governed by Acts like Pay As You Earn (PAYE) till the collapse of the East African Community (EAC) in 1977. After the collapse of the EAC, each country had to develop its own tax system. However the developing...