Strengthen Tax Measures on Super Rich Individuals to End Inequality – Oxfam Tells Gov’t

Oxfam in Uganda has called upon the government to strengthen tax measures on High-Net-Worth Individuals (HNWIs) to end inequality in Uganda, and to fund critical public goods and services such as education, healthcare, and infrastructure.

A high-net-worth individual is somebody with at least $1 million in liquid financial assets.

According to Uganda Revenue Authority (URA), Uganda currently has 1,375 High Net Worth Individuals.

Oxfam says that 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 recommendation was made during the National Tax Symposium hosted by Oxfam and partners in Kampala on Tuesday where a paper on widening the Tax Base of Low Income Countries with a case of taxing high net worth individuals 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 registered increased revenue collection by 19.7billion shillings in rental tax, PIT, VAT, and stamp duty by June 2016. By the end of financial year 2021/2022, 160.9 billion shillings had been collected.

Speaking at the Symposium, Oxfam in Uganda Country Director, Francis 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.”

The Oxfam in Uganda paper speaks to the narrative and call from its global report, “Survival of the richest’ that was recently launched.

According to the report, the richest 1% grabbed nearly two-thirds of all new wealth worth $42 trillion created since 2020, almost twice as much money as the bottom 99% 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 million 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.

The Executive Director, Southern and Eastern Africa Trade Information and Negotiations Institute (SEATINI), Jane Nalunga decried the collusion between government and the rich, which she said enables the rich to evade taxes.

“There is collusion between the rich and our government. When you look at Uganda, corporate tax has been going down every year. In 1981, it was 47.5%. Now, it is almost 30% coming down. It is the collusion between the rich and our government. We see the tax exemptions, the tax incentives, the privatization. When you look at the entire privatization process in Uganda, it was about taking away from government and giving to the rich. We see government not negotiating the double taxation agreements which allow corporations to be able to evade taxes, we see the public private partnerships where government gives the rich (you have heard about Lubowa hospital). We therefore need to break that collusion,” she said.

The Executive Director, SEATINI – Jane Nalunga speaking at the National Tax Symposium in Kampala on Tuesday.

WHAT 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 High Net Worth Individuals. 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 High Net Worth Individuals. This could include training on international tax laws and regulations, providing access to the latest technology and tools for data analysis and adopting the best practices to enable tax officials to detect and investigate tax evasion and avoidance schemes.

Close tax loopholes:

The government should work to close the loopholes that allow High Net Worth Individuals 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 High Net Worth Individuals 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.

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