TAX EVASION AND REVENUE COLLECTION PERFORMANCE IN LOCAL

GOVERNMENT IN UGANDA
A CASE STUDY OF KAMPALA CAPITAL CITY AUTHORITY (KCCA)

BY
TURYAMUREEBA JULIUS

SUPERVISOR: OBOTH ALEX

A RESEARCH REPORT SUBMITTED TO ST. LAWRENCE UNIVERSITY IN

PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE AWARD OF
BACHELOR DEGREE IN BABA ACCOUNTING OF
ST. LAWRENCE UNIVERSITY

MAY 2020

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DECLARATION
I personally declare that this Dissertation is a result of my own collections and it has never
been submitted to any other institution for any reward. Where it is indebted to the work of
others, due acknowledgement has been made.

TURYAMUREEBA JULIUS
Signature…………………. Date…………………………………

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APPROVAL
I confirmed that this research dissertation was done on my supervision. This work was
submitted with my approval as a supervisor for the partial fulfilment of the award of Bachelor
degree of Business Administration (Accounting).
OBOTH ALEX (UNIVERSITY SUPERVISOR)
Date:…..…/………………/………………… signature:………………………….........

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DEDICATION
I dedicate this dissertation report to my family members, Guardians and Friends for their
moral, Financial and spiritual support rendered towards my life while studying this Course.
May the almighty God reward them for me?

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ACKNOWLEDGEMENT
First and foremost, would like to acknowledge the administration of Kampala Capital City
Authority (KCCA) for allowing me carry out my research exercise in their institution. It’s my
heartfelt and pleasure to give special thanks to God Almighty who has always been there for
me at all times and to whom I owe everything. With great gratitude I thank my Supervisor
Oboth Alex for his tireless support and guidance, this work wouldn’t have been a success.
My heartfelt appreciation goes to my beloved parents, Mr. and Mrs Matombe Ephraim and
everyone who has done all it takes to make my education a success. I also owe a great deal of
thanks to management and staff of Kampala Capital City Authority especially Mr. Ndaula
the Finance manager, Market vendors of St. Balikudembe Market for having sacrificed their
time amidst their tight schedules to fill my questionnaires. Not forgetting to thanks the
administration of St. Lawrence University for having assigned every second-year students to
carry out research dissertation before graduating. It therefore equipped the capability of my
knowledge to pleat this meaning information today.

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ABSTRACT
This study is about tax evasion on revenue collection performance in Local government in
Uganda with particular emphasis on Kampala Capital City Authority. It examined specific
factors for rising tax evasion and establishing mechanism to curb the problem. The study was
conducted in Kampala Capital City Authority. Data were collected through documentary
analysis, questionnaires and interviews. Quantitative data were analysed by means of
descriptive statistics. Qualitative data were subjected to content analysis. The specific
objectives of the study were; to examine the factors affecting revenue collection performance
in KCCA. The study employed a descriptive survey design on a sample of 30 respondents
who were selected using purposive sampling from KCCA officials and simple random
sampling from St Balikudembe Market vendors. Data from this source was also
supplemented by secondary data from text books, Journals and dissertations. Questionnaires
were designed and administered to the respondents. Findings of the study revealed that the
major factors for revenue collection are; Level of income of tax payers, willingness of tax
payers, level of tax administration, existence of various Acts among others. The study further
revealed that a number of sensitization programs have been exercised by KCCA for example
early assessment of tax payers, publishing of budgets and final accounts of KCCA, Review
programs on benefits of paying taxes among others. More so the causes of tax evasion were
revealed as, poor record management, high tax rates, tax payers not knowing the value of
paying taxes among others. It was discovered that revenue collections are always short of
targets basically due to high rates of tax evasion and some corruption tendencies.
The relationship between tax evasion and revenue collection was determined using Karl
Pearson’s correlation coefficient. It was established as 0.84. It was concluded that there is a
strong positive relationship meaning that the low levels of tax revenues are significantly due
to tax evasion with other factors taking a light blame.

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 TABLE OF CONTENTS
Contents

Preliminaries

DECLARATION.......................................................................................................................................1
APPROVAL.............................................................................................................................................2
DEDICATION..........................................................................................................................................3
ACKNOWLEDGEMENT...........................................................................................................................4
ABSTRACT..............................................................................................................................................5
CHAPTER ONE.................................................................................................................................13
1.0. Background to the study..........................................................................................................13
1.0.1. Tax Evasion............................................................................................................................13
1.0.2 Revenue collection.................................................................................................................13
1.1. Statement of the problem.......................................................................................................14
1.2 .Purpose of the study................................................................................................................15
1.3. Objectives of the study............................................................................................................15
1.4. Research questions..................................................................................................................15
1.5. Scope of the study...................................................................................................................15
1.6. Significance of the study..........................................................................................................17
CHAPTER TWO:...........................................................................................................................24
2.1. Introduction.................................................................................................................................24
2.2.0. Definitions of terms..................................................................................................................24
2.2.1. Tax.....................................................................................................................................24
2.2.2. Tax base................................................................................................................................24
2.2.3. Tax administration............................................................................................................24
2.2.4. Tax assessment.................................................................................................................25
2.2.5. Taxation............................................................................................................................25
2.3.0. Tax evasion........................................................................................................................26
2.3.1. Factors affecting tax payer’s compliance.........................................................................26
2.3.2. Forms of tax evasion.........................................................................................................29
2.4.0. Revenue collection performance......................................................................................29
2.4.1. Factors affecting Revenue collection................................................................................29
1.7 conceptual frameworks........................................................................................................33
2.5. Summary...............................................................................................................................35
2.6. Hypotheses of the study........................................................................................................35

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 CHAPTER THREE..........................................................................................................................36
METHODOLOGY..........................................................................................................................36
3.0. Introduction.........................................................................................................................36
3.1. Study area.............................................................................................................................36
3.2. Research approach................................................................................................................36
3.3. Research design...................................................................................................................36
3.4. Study population..................................................................................................................36
3.4.0. Research Variables............................................................................................................37
3.4.1. Independent variable........................................................................................................37
3.4.2 Dependent variable...........................................................................................................38
3.5. Sampling design...................................................................................................................38
3.5.0. Sample size........................................................................................................................38
3.5.1. Sources of data.................................................................................................................38
3.5.2. Primary data......................................................................................................................39
3.5.3. Secondary data.................................................................................................................39
3.6.0. Data collection instruments..............................................................................................39
3.6.1. Questionnaires..................................................................................................................39
3.7. Data processing and analysis...............................................................................................39
3.7.1. Data processing.................................................................................................................40
3.7.2. Data analysis.....................................................................................................................40
3.8. Problems encountered........................................................................................................40
CHAPTER FOUR...............................................................................................................................42
PRESENTATION, ANALYSIS AND DISCUSSION OF FINDINGS...............................................42
4.1.0. Introduction...............................................................................................................................42
Table 4.1.1 Response rate....................................................................................................................42
4.2.1 Gender of the respondents........................................................................................................42
Table 4. 2: Gender of respondents.......................................................................................................42
4.2.2: The age group of the respondents..............................................................................................43
Table 4. 4: Marital status of the respondent.........................................................................................43
4.2.4: Employment engagement of the respondents.............................................................................43
Table 4. 5Employment engagement of the respondent........................................................................43
4.3.1: Factors for revenue Collection...................................................................................................43
Table 4. 6: Factors for revenue collection............................................................................................44
4.3.2: Rating of sensitization programs........................................................................................44

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Table 4. 7: Sensitization programs exercised by KCC Officials..........................................................44
4.3.4: Response on tax revenues affecting the overall revenue collection...........................................45
Table 4. 9: Tax revenues affect overall output performance................................................................45
4.3.5: Response on revenue lost through tax evasion...........................................................................45
Table 5. 1: Tax revenues are usually lost through tax evasion.............................................................45
4.3.6: Response on revenue collection procedures...............................................................................45
Table 5. 2: Revenue collection procedures influence revenue collection.............................................46
4.3.7: Inadequate revenue collection measures....................................................................................46
Table 5.3 inadequate revenue collection measures..............................................................................46
4.3.8: Large number of tax payers adheres to full payment of taxes levied.........................................46
Table 5. 4: A big number of tax payers adhere to full payment of taxes levied on them.....................46
4.3.9: Revenue collection policy and tax base.....................................................................................47
Table 5. 5: Revenue collection policy and tax base as determinants of revenue collection..................47
4.3.10: Tax revenues falling short of targeted......................................................................................47
Table 5. 6: Revenue collection falling short of targeted......................................................................47
CHAPTER FIVE.................................................................................................................................49
5.0. INTRODUCTION........................................................................................................................49
5.1. Summary of findings....................................................................................................................49
5.2.0. Conclusion.................................................................................................................................52
5.3 RECOMMENDATIONS...............................................................................................................52
REFERENCES....................................................................................................................................53

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 CHAPTER ONE
1.0. Background to the study.
According to Local Government act 1997) Local governments were given the mandate to
raise their own revenue to finance their activities. A large portion of this revenue is from
taxes and according to Wilkinson, Taxes play a much larger role in society and the general
economy than the mere raising of revenue. A tax is confined to compulsory inequitable
payment to the general government.
1.0.1. Tax Evasion
Tax evasion refers to the minimization of one’s tax liability by methods that violate the
provisions of tax codes and it’s therefore an offence that if one discovered could lead to
imposition of criminal proceedings against the tax payer. Tax evasion is a universal
phenomenon which has been in existence for a long time and still continues to impose
growing challenges on tax authorities and the government Lack of transparency among
various tax payers and informal sectors in Kampala city like the venders along Kampala
streets for example the venders who normally sell at night along Kampala streets to avoid
payment of taxes all indicates tax evasion. According to findings by Dr Marios Obwama,
total revenue loss due tax evasion as a result of underreporting of incomes in 1992/93 was
480 million, hence explaining the causes of persistent budget deficits despite the collection of
tax revenues More so, according to Allen Kagina (URA Commissioner), “URA has been
inconsistent in meeting its revenue targets due to intensive tax evasion. “Source, Daily
Monitor June 13 2006.Tax evasion comes in a number of different forms among which is
ignorance of tax obligations and evasions, poor tax administration and un favourable
economic factors.
1.0.2 Revenue collection
Tax revenue is the amount of money generated through taxation.
Taxation is one of the major fiscal policy instrument through which the government gets most
revenues. 4

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Adam Smith one of the apostles of laissez-faire defined clearly the duties of the government
to include maintenance of security, giving instructions and improving the productivity of land
by building the infrastructure. Government will therefore will continue to emphasize
domestic revenue mobilization in order to ensure that country`s dependence on external
finance is reduced. As a result of the poor performance of the tax policy in Uganda in the past
years, the government resorted to heavy external borrowing to finance her budget
expenditure. According to Sam Kutesa (once the mister of foreign affairs, source, New vision
June 13th 2005), Uganda spends up to US $ 200million to service its debt annually.
According to the report revealed in 2007/2008, Uganda received grant of US Dollar 10.2
billion from United State government to strengthen investigation and documentation of
corruption cases in taxation to boost the tax policy While of recent according to the paper
(quarterly publication of the economic policy Research centre Nov 2009), URA
collections underperformed by approximately shillings 23.9 billion against the months target
of shillings 328.46 billion. It is this continued variance in revenue collection performance as
evidenced from above that prompted the researcher to find out whether it is due to tax
evasion or other factors, to find out causes of tax evasion and relate it with revenue collection
performance.
1.1. Statement of the problem
According to local government Act 1997, Local governments in Uganda and KCCA in
particular were given the mandate to raise their own revenues to finance their activities.
However much as the government is said to have sovereign right to collect taxes, nobody
likes paying taxes and yet everybody appreciates that taxes need to be paid. This drives some
persons into the act of tax evasion. Several policies have been undertaken to reduce this act
for instance the formation of Uganda Revenue Authority(URA) in 1991 was to strengthen tax
revenue collection, and anti-corruption measures have been undertaken to reduce amount of
tax loss. For example, 2007/08 Uganda National Budget revealed that Uganda received 10.2
billion from US government to strengthen tax investigations and documentation. 5

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Despite of the above efforts and commitments to reduce tax evasion, according to Allen
Kagina (URA Commissioner) “URA has been inconsistent in meeting its revenue targets due
to intensive tax evasion” source, Daily monitor June 13th 2006. Also, during the financial
year 2005/06, KCCA planned to collect 17,390millions but received 11,125 million (from
Budget Framework paper 2007/08). From this we note that revenues have persistently
fallen short of targeted, it’s this that have prompted the researcher to try finding out whether
such revenue collection performance is being brought about mainly by tax evasion or other
factors as yet to find.
1.2 .Purpose of the study.
To establish the nature of the relationship that exists between tax evasion and revenue
collection performance in local governments in Uganda in general and KCCA in particular.
1.3. Objectives of the study.
1. To examine the factors affecting revenue collection performance in Kampala Capital City
Authority (KCCA).

2. To examine the causes of tax evasion among potential tax payers in Kampala Capital City
Authority.

3. To establish the nature of the relationship between tax evasion and revenue collection
performance in Kampala Capital City Authority (KCCA)

1.4. Research questions.

1. What are the factors affecting Revenue collection performance in Kampala Capital City
Authority?

2. What is the nature of the relationship between tax evasion and Revenue collection
performance in Kampala Capital City Authority?

3. What are the causes of tax evasion among potential tax payers in Kampala Capital City
Authority

1.5. Scope of the study.

Subject scope.
This study focuses on the nature of the tax evasion as independent variable and revenue
collection performance as a dependent variable. Tax evasion practices have an impact on

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revenue collection performance especially in developing countries (Shalinzi and
squire1989).

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Revenue collection performance means percentage of budgeted collections that is actually
collected as was suggested by Nsamba (2000) the actual tax paid by the tax payers honoring
their obligations also shows the performance as was suggested by Nsamba (2000) and as was
used by Abigaba (1998) and Driaro et al (1998).

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Geographical scope. The study is limited to Kampala Capital City Authority because it
contributes over 80% of the total government revenue . The research focuses on local sources
of revenues collected by Kampala Capital City Authority. The study therefore attempts to
examine tax evasion, how it influences revenue collection performance and recommendations
on maximizing revenue yields. Time scope. The period with in which this research is to be
carried out is 2020. Therefore this research is limited to this period.
1.6. Significance of the study
The study will provide information to policy makers especially in Ministry of Local
Governments (including KCCA) and donors to find lasting solutions to the persistent
financial problems of local governments in Uganda. The findings will assist URA to curb
corruption and other revenue malpractices (such as tax evasion and smuggling) with in their
rank and files. Understanding the factors affecting revenue collection performance is also
important to policy makers at local government level, so this study will be beneficial to local
governments if they are to perform better in revenue collection and consequently better
service delivery. The study will also result into partial fulfilment the award of Bachelor in
Business Administration and Accounting of St.Lawrence University to the researcher. The
study will help to identify the gaps that lead to tax evasion in local governments and make
recommendations in attempt to curb down tax evasion.

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 CHAPTER TWO:
LITERATURE REVIEW
2.1. Introduction
This chapter of the study presents literature reviews and in relation to the study variables on
Influence of tax evasion on revenue collection performance put forward by different
Authors. The chapter aiming at identifying existing literature materials which
formed the basis for further research in terms of data collection and analysis.
2.2.0. Definitions of terms.
2.2.1. Tax
A tax is a compulsory levy imposed by the government upon assesses of various categories.
For a tax to be known as income tax it should be charged for each year of income and it there
by imposed on every person who has chargeable income [income tax Act1997] These may
be individuals or other legal persons Tax according to Mannesh, 2000 is paid without
corresponding returns in terms of goods and services from government to particular tax
payers.
2.2.2. Tax base.
According to Lubega, I. (1999), a tax base is the object on which a tax is based for example
income tax is based on income.
2.2.3. Tax administration.
Sake (1998), defined the process of tax administration to include the identification and
registration of the tax payer to whom he law applies; the assessment of this tax payer either
through self or compulsory assessment; the collection of tax dues and accounting for them to
the state (heads of the council for this case) and advising the state (heads of the council) on
better ways in which more revenues can be collected by pointing out areas of improving the
legal and institutional framework.

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2.2.4. Tax assessment.
Under Sec 3 of the income tax Act, assessment is defined as the ascertainment of chargeable
income and the amount of tax payable on it by the tax payer for a year of income under this
Act, including a deemed assessment under Section 97.Among the major assessment
activities are evaluation and audits and the latter activity being the most important
(Denjntscher, 1992). Bird (1992) asserts that audits to be effective must be selectively based
on some rational citizens and should in any case include intensive field audits conducted by
well-trained officers. Pigou (1951) noted that any tax formula is made of two elements,
namely the object of assessment and the function. This function relates the quantity of
revenue to be raised from the individual tax payers to the quantity of assessable objects in
their hands, that is, the relationship between revenue and tax base.
2.2.5. Taxation.
Taxation as defined by Mugerwa (1990) is a sovereign right the state uses to transfer
resources from private use to public use in the way that is most suitable and consistent with
the economic goals of the society. According to Dalton (1987), taxation is a compulsory
contribution imposed by a public authority irrespective of the exact amount of service
rendered to the tax payer in return. While to Orsbrnes (1984), taxation is the imposition of
duties to raise revenue. Taxes play a much larger role in society and to the general economy
than the mere raising of revenues according to Margaret Wilkinson. However according to
Tayebwa (1992), the government of Uganda has three main sources of revenue. These
include tax revenue, non-tax revenue and donations or grants. Taxes serve two purposes as a
tool to protect infant industries by idea of tax holidays in order to make them compete with
already existing firms and revenue for financing government expenditure. Taxation to be
effective should be based on certain principles according to Mugerwa (1989), the tax system
in the world has developed on the principles of economics, political and social factors but the
economic factors are the manifold ones. Therefore a good tax system should be designed in
such a way so as to meet efficiency in resource allocation, goals of macro-policy as well as
administration.

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Adam Smith for example quoted Mwanja Wilson (1999) suggested that a good tax should
be economical, ensures equity, certainty, convenience and simplicity. According to Truett et
al (1987), the tax burden should be based on two criteria, the benefit and the ability to pay
criteria. While the benefit criteria spell out that those who receive the benefit financed taxes
should pay for them, the ability to pay criterion stresses for payment in respect to ability.
Robinson and Starnford (1993) argues that the government exists for the purpose like
improving the welfare of the population or promoting economic development and that they
use taxation as a tool for attaining these expectations. Taxes are a means of financing social
welfare, enhancing policies and programs. The ultimate goal of taxation is therefore welfare
maximization.
2.3.0. Tax evasion
Tax evasion refers to one’s tax liability by methods that violate the provisions of tax codes
and it’s therefore an offence that if one discovered could lead to imposition of criminal
proceedings against the tax payer. Tax evasion is a universal phenomenon which has been in
existence for a long time and still imposes growing challenges on tax authorities and the
government. Whiteman and Wheat Craft (1965) defined tax evasion as a reduction of tax
liability by omitting certain items from returns. However this was opposed by Ruffin and
Gregory (1938) that if people believe that taxes are un fairly levied, they will evade them.
Iga (1999) differentiated it from tax avoidance explaining that tax avoidance involves using
legal means to prevent or reduce tax liability which the tax payer would otherwise have
incurred.
2.3.1. Factors affecting tax payer’s compliance
Several writers have come up to suggest what really affects the tax payer’s compliance
leading to evasion of taxes. Chon and Reinikka (1999) argue that people engage in tax
evasion when the expected benefits (low taxes) are equal to the expected costs (bribes and
punishments).

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This tends to agree with Alongham and Sandmo (1972) who also suggested that a rational
individual’s choice to evade will be based on the expected gains or losses associated with the
decision. To further the argument, Bird (1989) asserts that evaders in most developing
countries can realistically assign expected value of zero to the likelihood of being detected
and penalized; that the more severe the penalty, the less likely it is to be applied which
showed a weakness in administration. However he noted that, penalizing non compliers
appeared to have had a healthy effect on stimulating compliance, a view Iga (1999) agreed
to. Contrary to that view, Wentworth et al (1985) asserted that causes of tax evasion are the
exchange, social class and chances available for evasion .Evaders in that study reported that
they were not getting value for their money, tax rates were too high and that government did
not spend payer‟s money wisely, that the burden of taxes fell on low income and salary
earners. These view seem prevalent in Uganda(see Abigaba (1998), Muhumuza(2000),
Lubega(2000) ,although on the issue of tax rate , YitZhaki(1986) and Etzioni(1986) argue
that tax evasion is basically independent of the tax rate. WallSchutzky 1983) asserts that tax
evasion is mainly as a result of the exchange relationship which considers the benefits from
the government, the social orientation and administration officers may influence tax payer’s
response. To further the argument, Glasser and Denhardt (2000) asserts that citizens are
increasingly reluctant to pay taxes based on the perception that they are getting a poor return
on tax dollars invested. In Uganda, the benefit and exchange arguments as proposed by
Wallschutzky(1983), Bird(1991), Bird et al (1995) and Mclure (1998) are some of the
explanations of evasion especially in the urban areas (Abigaba,1998) like Kampala city
Edward et al (1998) noted that a tax payer‟s probability of being audited reduces his
probability to evade. However, Bird (1991) argues that tax evaders in most developing
countries can 12

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realistically assign expected value of zero to the likelihood of being detected and penalized
and that voluntary compliance is largely a myth. Bird (1992) added that ones willingness to
pay is also affected by existence of evading members in society. Although, improvement in
tax collection in Uganda 1996 was attributed to the vigilance of the administration and
people‟s willingness to pay (Kasumba 1997). Shalinzi and Shan (1991) with a broader
perspective noted that tax structures in most developing countries (like Uganda) raises little
revenue and the reason seems to be (Tirsk, 1991) weak administration, tax evasion and
avoidance. He argues that to obtain better compliance, countries should strengthen tax
administration activities including collection procedures. According to Tanzi and Shome
(1993), tax evasion is universal. It takes place in all societies, social classes and professions.
They argue that tax evasion depends on the economic structures, level of income and tax
payer’s social attitudes. Tax evasion solely rests on attitudes towards risk, given full
information regarding tax administrator’s behaviour. Since tax evasion impacts on revenue
collection, it can as well be argued that economic and tax structures, tax payers, levels of
incomes and social attitudes play a role in determining revenue collection. Obwana (1999)
argues that concealing the income of self-employed households can lead to the conclusion
that there is no enough revenue to be taxed. He argues that evasion occurs when some
individuals fail to disclose their incomes or employment or both to the tax authorities. As a
result, some activities are not recorded in the official statistics. The more people evade taxes,
the more the tax base and tax revenue eroded. Successfully evasion may be due to
administrative inefficiency, poor tax culture, political interference or a combination of these
or other factors as this research seeks to establish. 13

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2.3.2. Forms of tax evasion
According to Mwenda, tax evasion can take any of the following forms:
Failure to report incomes profits or gains otherwise legally chargeable to tax.

Reporting only part of the income gains or profits.

Maintaining false books of accounts with intent to reduce taxes.

Making false claims of expenses or allowances or deductions

Under declaration of goods for duty purposes

Outright smuggling to avoid payment of duties

2.4.0. Revenue collection performance

Revenue performance is the tax that is collected and it shows the compliance of tax payers
(Mulindwa, 2000) Raising local government revenue enhances local government legitimacy
in its dealing with the centre (Sholton, 2000) and as Okumu (1991) noted, without funds
from taxes, local authorities would virtually grind to a halt if central government failed to
provide substitute funds. He adds that the objective of raising taxes is to raise revenues for
the government so that it can undertake its various policy measures concerning the society as
a whole.
2.4.1. Factors affecting Revenue collection.
However, Baffes and Shan (1990) carried out a study in South Africa to determine the
causes of revenue shortfalls and found out that short falls arose from increased abnormal
expenditure. The expenditure did not match the actual growth of the revenue trends in real
terms. With James and Nobes (1992), it is found that administrative expenditures during
budgeting process caused inefficiencies in tax revenue collection. They suggest that clear
monitoring procedures were required to determine and measure costs such as salaries and
wages of revenue collectors, enumeration and assessment of the tax payer, etc. They therefore
established that efficiency in tax collection would be realized if these costs were checked
with high level of

24
accuracy. These would enhance smooth running of revenue collection exercise and reduction
of tax evasion and avoidance. Pigou (1951) contends that any tax formula is made up of two
elements namely, the object of assessment and function. He points out that the function
relates the quantity of revenue to be raised from the individual tax payer to the quantity of
assessable object in their hands. That is, the relationship between tax revenue and tax base.
He asserted that theoretically, this base can be anything but practically, it is largely some sum
of money or income in some cases it is quantity of stuff such as commodities or land. In a nut
shell he suggests that tax revenue is a function of tax base. Musgrave and Musgrave (1983)
noted that assessment and collection of taxes require personnel and equipment. Tax revenue
collectors ought to be facilitated with equipment that enables them execute their duties
efficiently and effectively. Personnel ought to be empowered to rightly assess, collect and
remit tax revenue to the treasury. Therefore how much is collected in tax revenue will depend
on how well equipped the tax personnel is. Samuelson and Nordhous (1991) argue that the
major reason why direct taxes have become more increasingly popular is that they can easily
be tailored to fit personal ability to pay. They further argue that justice implies taxing equals
equally. Therefore the progressiveness and repressiveness of the tax system has got an
important bearing on revenue collection. It therefore suffices to say that if local governments
are to circumstances such as the size of the family, income, age and more generally the ability
to raise more revenue, they should pursue a progressive tax system. Bagchi and Stern (1994)
argue that India experienced a wide range of tax revenue shortfalls due to gaps in income
distribution between the poor and the rich under federal system of governance. The rich who
formed the largest portion of tax revenue deliberately evaded tax payments. Revenue
mobilization was a problem due to the inefficiencies in tax structure. 15

25
Prest (1962) argued that the relationship between the tax payers and tax collectors play an
important role in determining the revenue collected. There is need for manual respect
between the tax payers and tax collectors if taxes are to be collected efficiently and
effectively. A study was carried out and it was found out that income tax in most developing
countries is more dependent on the cooperation between tax payers and tax collectors and that
lack of mutual respect between the two may increase non tax compliance and lowering
revenue collection. In Uganda, political interference has had an impact on revenue collection.
In a study on fiscal decentralization in Uganda, it was found out that, local revenue is falling
partly because some politicians tend to grant informal tax holidays before elections (MoLG,
2000).This lowers revenue collection by the respective local authorities. Simon (1993)
singles out heavy reliance of local governments on a few revenue sources as possible cause of
low revenue collection. He accordingly recommended diversification of revenue sources in
recognition that no particular source of local government revenue could solve her problems
on its own. However it is noted that Kampala Capital City Authority despite enormous
diversification of revenue sources, still encounters revenue collection shortages, implying that
there should be other causes to be explored in this study. Tanzi (1988, 1992), Tait (1991),
Casanare de Jantscher (1982), argue that inefficient tax administration has been identified
as one of the serious constraint to tax revenue mobilization. Tanzi (1987) notes that
inefficient tax administration can result from lack of resources, lack of necessary degree of
professionalism and accountability and lack of clear strategy for improving efficiency. He
also argues that complex and opaque laws and the political system can lead to inefficient tax
administration. This problem could also be responsible for low revenue collection from the
non tax sources
According to the paper produced on performance of the economy in Uganda(November
2009) by URA, Net URA collections for the months of November amounted to shillings
304.56 billion representing a 92.72% performance against the months targets of
328.46billions hence a shortfall 16

26
in revenue collection for the months by 23.9billion. This was an account of
underperformance of indirect domestic taxes and taxes on international trade by 1.05% and
16.5% respectively.

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1.7 conceptual framework
Independent variable of tax evasion effect of dependent variable tax revenue performance in
various ways including low revenue collection, budget deficit and failure to reach revenue
collection target. The question of how tax evasion affects the revenue collection performance
has not been closely examined in the public finance literature. Tax evasion alters the effective
tax rates and as such affects the efficiency, equity, and revenue yield of any given tax
instrument. Additionally, tax evasion has wide ranging implications especially regarding its
effect on tax revenues, excess burden, and the numerous out-of-pocket costs that are typically
associated with tax evasion. Government’s responses to the revenue shortfall created by tax
evasion, such as raising revenues from other sources, reducing the supply of public services,
and/or borrowing, could also lead to excess burdens. Related to this is the indirect effect of
tax evasion on economic institutions. For instance, when entrepreneurs or any other private
individuals are faced with burdensome bureaucracy, extreme levels of corruption, and a
deficient legal system, agents may respond by diverting their activities to the shadow or
underground economy. This leads to lower tax revenues, additionally compromising the
quality of the public administration as well as the quality and quantity of public goods and
Services.

28
 Independent Variable Dependent Variable

Low tax moral Reducing

lowo supply of
public
service

Low quality of the service in

Tax system and perception

Raising
of fairness
revenue
from other
Inadequate sources
Tax evasion revenue
Low transparency and
accountability of public collection
performance

High compliance cost Budget

dependency

Increase tax rate

Source Researcher 2020

2.5. Summary
In summary, this chapter has discussed the literature review (both theoretical and empirical),
Conceptual framework and the relationship of variables in study.

2.6. Hypotheses of the study

 There is high rate of tax evasion in Kampala tax implying Tax compliance is

29
 CHAPTER THREE
METHODOLOGY
3.0. Introduction
This chapter focuses on the research methods and the instruments used by a researcher to
carryout research. It provides a description of research design, sampling design, procedures
and size, study population, data collection and instruments, data processing and analysis,
limitations and problems that were encountered during the study.

3.1. Study area

The setting of the present study is conducted in Kampala Capital City Authority. It was
deliberately selected from other tax in Uganda. since had high rate of tax evasion in Uganda
and hence low revenue collection below the national target. For the example, in last financial
year 2019/20 only 57% of target revenue collection was collected.

3.2. Research approach

In this study, the researcher used both qualitative and quantitative approaches. According to
Tanzi (1988, 1992), Tait (1991), qualitative and quantitative research approaches have often
been used together in the same research project and in many cases to obtain methodological
triangulation so as to maximize the quality of the collected data. The qualitative approaches
were used to provide descriptive forms which involved conducting interviews, observation
and questionnaires with open ended questions. The choice for qualitative approach was based
on the fact that, interviews, observation and open-ended questionnaires enabled the
researcher together detailed information on effect of tax evasion on revenue collection
performance. The study also employed quantitative method which involved constructing
questionnaires with closed-ended questions. The choice for quantitative approach was based
on the fact that, the researcher was able to gather broad and quantifiable data on effect of tax
evasion on revenue collection performance. Further, the findings of this study were
represented by descriptive forms and statistical presentation.
3.3. Research design.
A descriptive research design was used in which revenue collection factors and tax evasion
causes were described and noted down. This was combined with a cross-sectional research
design to establish the extent to which tax evasion affects revenue collection performance.
3.4. Study population.
The study targeted tax officials of Kampala Capital City Authority (KCCA) and tax payers
(market venders in St. Balikudembe market and Kampala street traders) who are responsible

30
for revenue collection and tax payment or tax evasion respectively. The population included
both male and female especially tax payers because tax is usually paid by both male and
female individuals who have income or property.
3.4.0. Research Variables.
The principle independent Variable was tax evasion while dependent variable was revenue
collection performance.
3.4.1. Independent variable.
This was measured using five point likert scales basing on the indicators which are collection
procedures, assessment, monitoring systems, compliance, sensitization etc. For example on
tax payer sensitization, KCCA tax officials were asked which sensitization programs were
carried out 18

31
and whether tax payers were aware of what taxes are supposed to be paid, how much is to be
paid and benefits and penalties of paying or not paying respectively.
3.4.2 Dependent variable.
The dependent variable was measured basing on the percentage of budgeted collections that
is actually collected as compared to budgeted and this was summarized in the report from
KCCA. The five point likert scale was also used.
3.5. Sampling design.
Purposive sampling design was used in which KCCA tax officials were purposely selected
for interviews and questionnaires filling since they are the ones in custody of revenue
collection data and can easily tell about revenue collection performance in recent years. For
the traders along Kampala streets and St Balikudembe market venders, simple random
sampling was used. This offered the researcher an opportunity for selecting respondents who
fully represent the entire population. Among these traders, all the people dealing in items like
second hand items say shoes, clothes, bags among others, agricultural products, plastics meat
etc were listed out of which a sample was chosen.
3.5.0. Sample size.
The researcher collected data from 15 KCCA officials responsible for tax administration and
collection and 35 venders from St Balikudembe market and traders along Kampala streets.
This is in line with Mosco‟s rule of thumb (Sekaran, 2000) which states that a minimum
sample of 30 respondents is sufficient.
3.5.1. Sources of data.
The researcher used both primary and secondary data. Primary data was obtained from
responses from the questionnaires administered to tax payers who at times evade payment
(market venders and street traders), personal interviews to both KCCA tax officials and
selected market venders. Secondary data was also got from KCCA documents such as audit
reports, budget framework papers and newspapers among others.

32
3.5.2. Primary data.
Data was collected from tax officials of KCCA and market venders along Kampala streets
and St. Balikudembe market. These officials of KCCA included accountants, tax evaluators,
tax collectors, and the entire tax administration, while in St Balikudembe market and
Kampala street venders dealing in different items were covered.
3.5.3. Secondary data.
This was obtained from the following sources;
i. KCCA centre (main) budget reports were used to get information about revenue collection
and performance in recent years.

ii. Publications from libraries such as reports in newspapers like daily monitor, New vision
etc. These formed a basis of secondary data in supplement of the primary data.
3.6.0. Data collection instruments
Questionnaires were used to collect data from respondents and to those with busy schedules
were left with questionnaires that were picked later at an agreed convenient time after being
filled. In neither cases where the respondent could neither read nor write English, the
researcher read the questions to the respondent who provided the responses. Also
questionnaire guided interviews were used to get information from the respondents with tight
schedule because they would spare a few minutes of their time.
3.6.1. Questionnaires.
These were issued to respondents and they contained closed ended questions. This enabled
the researcher to tap responses in his own words These were employed to get information
from the respondents especially those with tight schedules but who could spare a few minutes
of their time.
3.7. Data processing and analysis.
After the fieldwork, questionnaires were carefully scrutinized, edited, classified coded and
analysed.

33
3.7.1. Data processing.
Data got from various documents and publications were read carefully and compared with the
responses from respondents on the questionnaires and interview guides. This was therefore
edited for completeness and accuracy and tabulated where appropriate.
3.7.2. Data analysis.
The relationship between the variables was established using Karl Pearson‟s correlation
coefficient and analysis was used to explain the nature of the relationship between the
independent and dependent. Also tables, graphs and percentages were used to analyze, and
present the findings of the study.
3.8. Problems encountered.
Like any other research study, a number of problems were encountered during the process of
conducting the study.
i. Lack of co-operation from the respondents as some of them had an „I don‟t care attitude‟.
Here the research was forced to give more clarification and more explanation as to why the
research was being carried out. This gave them more confidence and they were able to
respond positively.
ii. Communication was a problem as some of the respondents (market venders and street
traders) were not able to read and speak English and in which case the questionnaires had to
be translated.
iii. The research required a lot of funds which were not available. This would not only impact
on the sample size but also on the amount of information to be received. I was forced to
borrow from my friends to enable completion of my research and sometimes had to walk on
foot when taking questionnaires as a way to minimize costs.
iv. Research requires a lot of time amidst busy schedules of the researcher especially that I
was doing research alongside other course units. In fact I had to obtain meaningful and
sufficient information especially the market and market streets.
v. Non responses especially market venders thought that the information being collected was
for the taxation purposes.

34
More so, few people were willing to disclose information about their status and position as
regards taxes. Some had to be convinced to fill questionnaires.
vi. The researcher got a problem in finding the official concerned with giving necessary
information. It was hard retting these respondents since the study was conducted during
working hours. These made it difficult for the respondents to leave their work for the sake of
answering questions. However, I was able to leave questionnaires with them for some time
which enabled them to be filled at their convenience like over the weekend and would pick
them later.

vii. There was also a problem of inability to obtain some information from KCCA .Some of
the information was regarded as confidential and could not be given out. Therefore the
researcher opted for publications through the resource centre of KCCA and got the monthly
remittances to KCCA by the tax payer.

REVIEW. If I had to do this chapter again, I would include the following.

 Use a Conceptual Frame work to show all the Variables
 Use Interview Guides as a method of collecting information from Respondents.

Future Researchers should put the above into consideration. 22

35
 CHAPTER FOUR

PRESENTATION, ANALYSIS AND DISCUSSION OF FINDINGS

4.1.0. Introduction
Below this chapter, a presentation, analysis and discussion of findings is done in accordance
with the study objective. However, an analysis of the demographic characteristics of the
respondent is done first. The following definitions of codes were used in this section; strongly
agree (SA), Agree (A), Not Sure (NS), Disagree (D), and Strongly Disagree (SD).

Table 4.1.1 Response rate

Sample Response Respondent Rate
KCCA (TAX) 15 8 53.30%
OFFICIAL
MARKET VENDORS 35 22 62.90%
TOTAL 50 30 60%
Source; Primary Data
Out of the 15 questionnaires sent out to KCCA officials, only eight responded representing
53.30% of the sample. In addition, of the 35 questionnaires sent to market vendors, only 22
responded representing 62.90%. An average response rate of 60% was got hence making the
sample a sufficient measure of performance since KCCA (tax) officials and market vendors
(tax payers) were included. 4.2 The Background characteristics of the respondents.
4.2.1 Gender of the respondents.
Responses about the Gender of the Respondents were as follows.
Table 4. 2: Gender of respondents
Gender Of Respondents Frequency Valid Percent
Male 13 43.3
Females 17 56.7
Total 30 100
Source: Primary data
Results in the table 4.2 above shows that most of the respondents (56.7%) were females while
(43.3 %) were males. 24

4.2.2: The age group of the respondents.

Concerning the age group of the respondents, the following responses were got.

36
Table 4. 4: Marital status of the respondent.
Marital status Frequency Valid percent
Married 19 63.3
Single 4 16.7
Divorced 5 6.7
Widowed 2 13.3
Total 30 100
Status (numbers)
Source: Primary data. The results above indicate that most of the respondents (63.3%) were
married, 16.7% are single, 13.3% widowed while 6.7% Divorced. 26
4.2.4: Employment engagement of the respondents
On their employment engagement, respondents replied as follows.

Table 4. 5Employment engagement of the respondent

Employment Engagement Frequency Valid Percent

KCCA Official 8 26.7
Market 22 73.3
Total 30 100
Source: primary data
Revenue Collection Performance.
Objective: (To examine the factors affecting Revenue collection performance in KCCA)
the following findings are in line with the objective of examining factors affecting revenue
collection performance in KCCA.
4.3.1: Factors for revenue Collection
On the factors that most contribute to revenue collection performance, respondents replied as
follows
Table 4. 6: Factors for revenue collection.
Factors Affecting Revenues Frequency Valid Percent
Level of income of taxpayers 5 16.7
Existence of various act 6 20.0
Willingness of taxpayers 8 26.7
Level tax administration 11 36.7
Total 30 100.00
Source: primary data

The results in the table above shows that most respondents (36.7%) agree with the level of
tax administration as the major factor in determining revenue collection, 26.7% for the level
of tax payers, 20% for existence of various Acts and 16.7% for level of income of tax payers.
4.3.2: Rating of sensitization programs

37
On the sensitization programs exercised by KCCA officials to maximize revenues, reply was
as follows.
Table 4. 7: Sensitization programs exercised by KCCA Officials
Programs Frequency Valid percentage.
6 20
1. Early assessment of tax payers.

9 30
2. Publishing of budgets and final accounts of
KCCA.

15 50
3. Review programs on benefits of paying taxes

Total 30 100
Source: Primary data.

Most of the respondents (56.7%) do not accept that having applied a number of sensitization
programs have in itself led to increased tax collection while 43.3% agree with the statement.
4.3.4: Response on tax revenues affecting the overall revenue collection.
Regarding response on whether tax revenue collection affect the overall revenue collection
output, the response were as follows.

Table 4. 9: Tax revenues affect overall output performance.

Extent of SA A NS D SD Total
agreement
Frequency 6 10 - 8 6 30
Valid Percentage 20% 33.3% 26.7% 20% 100
Source: primary data

The results in the table above indicate that most respondents (33.3%),agree that tax revenues
have an effect on the overall revenue collection performance, 26.7% Disagree with it and
20% Strongly Agree with the statement.

4.3.5: Response on revenue lost through tax evasion.

38
Regarding the response on whether revenues are usually lost through tax evasion, the extent
of agreement was as follows
Table 5. 1: Tax revenues are usually lost through tax evasion.
Extent of Agreement. SA A NS D SD Total.
Frequency 5 10 - 13 2 30
Valid percentage 16.7% 33.3% - 43.3% 6.7 100
%
Source: primary data

The above results indicate that most respondents (43.3%) disagree with the belief that most
revenues are usually lost through tax evasion, where as 33.3% agree, 16.7% strongly agree
and finally 6.7% strongly disagree.

4.3.6: Response on revenue collection procedures.

Concerning response on whether revenue collection procedures influence level of revenues

collected, reply was as follows.

Table 5. 2: Revenue collection procedures influence revenue collection.

Extent of agreement SA A NS D SD Total

Frequency 8 8 2 8 4 30
Valid percentage 26.7 26.7 6.7 26.7 13.3 100
Source: Primary Data

The result above indicate that equal respondents (26.7%) strongly agree, agree and disagree
with the fact that revenue collection procedures influence level of revenues collected, while
13.3% strongly Disagrees and lastly 6.7% were not sure.

4.3.7: Inadequate revenue collection measures

On the response about revenue collection measures being inadequate and thus leading to
revenue collection short fall of targeted, reply were as follows

Table 5.3 inadequate revenue collection measures

Extent of agreement SA A NS D SD Total

Frequency - 17 - - 13 30
Valid percent 56.7 43.3 100

Source: primary data

39
The results in the table above shows that most respondents (56.7%) agree with inadequate
revenue collection measures leading to revenue collection falling short of targeted, where as
43.3% disagree with the above statement.

4.3.8: Large number of tax payers adheres to full payment of taxes levied.

About the question on whether a big number of tax payers usually adhere to payment of full
amount of tax levied on them, respondents replied as follows.

Table 5. 4: A big number of tax payers adhere to full payment of taxes levied on them.

Extent of agreement SA A NS D SD Total

Frequency 7 17 1 5 - 30
Valid percentage 23.3% 56.7% 3.3% 16.7% - 100
Source: primary data

The result shows that most of the respondents agree with the fact that a big number of tax
payers usually adhere to payment of full amount of taxes levied on them (56.7%), where as
23.3% strongly agree, 16.7% disagree and 3.3% of the tax payers were not sure.
4.3.9: Revenue collection policy and tax base.
Regarding the response of the respondents on whether revenue collection and the nature of
the tax base greatly determines the amount of revenues collected, response were as follows.

Table 5. 5: Revenue collection policy and tax base as determinants of revenue collection

Extent of agreement SA A NS D SD Total

Frequency 7 12 2 6 3 30
Valid percentage. 23.3% 40% 6.7% 20% 10% 100
Source: primary data

From the table above, the findings indicate that more respondents (40%) agree and
23.3%strongly agree that tax base and tax administration truly determines revenue collection.
These similar factors were mentioned by Montgomery et al (2000) when he wrote that
income tax is determined by many factors among which is revenue collection policy ,tax base
and tax administration procedures.
4.3.10: Tax revenues falling short of targeted.
On the issue of whether tax revenues have always fallen short of targeted, the respondents
replied as follows below in the table.

Table 5. 6: Revenue collection falling short of targeted.

40
Extent of agreement SA A NS D SD Total
Frequency 7 12 2 6 3 30
Valid Percentage. 23.3% 40% 6.7% 20% 10% 100
Source: Primary data.
On response as to whether tax revenue collection have always fallen short of targeted
according to the results in the table, most respondents(40%) agree while 23.3% strongly
agree too that tax revenues have always fallen short of targeted.20% disagree and 10%
strongly disagree un like 6.7% of the respondents who were not sure. However most
respondents having agreed that revenue collection have always fallen short of targeted, was in
similar way mentioned by Musgrove (1993) who said that inefficiencies in the tax collection
system may undertake actual revenue from the budgeted level. The reasons given for this
include: high rates of tax evasion and avoidance and corrupt tendencies in the revenue
collection system. They also mentioned that the cost of revenue collection is higher than
expected and thus actual collection cannot equal to set targets.

CHAPTER FIVE

5.0. INTRODUCTION
This chapter, the researcher summarizes the study findings, conclusions and
recommendations in accordance with study objectives.
The study objectives were:
1. To examine the factors affecting revenue collection performance in Kampala Capital city
Authority (KCCA)
2. To examine the causes of tax evasion among potential tax payers in Kampala Capital City
Authority.
3. To establish the relationship between tax evasion and Revenue collection performance in
Kampala Capital City Authority.

41
5.1. Summary of findings
Objective I: Factors affecting revenue collection performance. The study found out that
revenues collected included rates, Grounds, Car parks, Licenses, Debt recovery rates among
others. It also revealed that the major factors affecting revenue collection performance were;
level of tax administration, willingness of tax payers to pay taxes, level of income of the tax
payers among others. It again indicated that tax revenues have an effect on overall revenue
output performance, something that made the respondents rate the question on whether tax
revenues affect overall output performance as strongly agree. It was found out that revenue
collections are always short of targets basically due to tax evasion.
Objective II. Nature of causes of tax evasion The study revealed that major causes of tax
evasion among potential tax payers included; high tax rates, poor record management,
ignorance of tax payers about usefulness of paying taxes because tax returns are not realized,
most of the taxes being indirect among others.
It was also found out that some market vendors hide some information especially during tax
assessment to reduce tax liability and that proper books of accounts are not always presented
too, 50 which was showed by most respondents ticking disagree with the statement of
whether proper books of accounts are always presented. Again it was revealed that tax payers
are not always treated well during tax collection as shown by ticking of Disagree by most
respondents (market vendors.

42
which was showed by most respondents ticking disagree with the statement of whether
proper books of accounts are always presented. Again it was revealed that tax payers are not
always treated well during tax collection as shown by ticking of Disagree by most
respondents (market vendors).

43
Objective III. Nature of the relationship between tax evasion and revenue collection
performance. A strong positive relationship between tax evasion and revenue collection
performance of 0.84 magnitudes was established.

5.2.0. Conclusion
From the above findings, the researcher concludes that;
Objective 1: Factors affecting revenue collection performance. Revenue collection
performance in KCCA is mainly affected by level of tax administration, willingness of tax
payers, level of income of the tax payers among others and these can be controllable by
KCCA.
Objective 2: Tax evasion in KCCA is majorly caused by high tax rates, poor record
management, and ignorance among tax payers for the benefit got out of paying such taxes.
However, revenue shortfalls through tax evasion are being curbed by taking legal actions
against tax defaulters. Objective 3. Relationship between tax evasion and revenue collection
performance. It can be concluded that the low levels of revenue collection are largely due to
existence of tax evasion which is indeed caused by factors that can easily be dealt with by
KCCA officials, plus other factors taking a light blame.

5.3 RECOMMENDATIONS.
Basing on the findings of the study, the researcher has come up with the following
limitations:
There is a need to engage in massive public awareness as far as the total pay taxes is
concerned.KCCA needs to exploit a lot of possible avenues like radio programs, Seminars
and LC market officials in order to sensitize the public about the benefit of paying taxes. This
will play an important role in improving revenue collection
51 KCCA needs to use all the pieces of law at its disposal against all tax defaulters and
ensure recovery even if it means use of courts of law. This is important given the fact that a
lot of revenue is being lost through tax evasion and avoidance which can account for a
substantial portion of revenue.
More so, tax rates should be revised with the objective of through tax base widening. If taxes
are low more people will be willing to comply than when they are high. Therefore taxes
should be lowered and tax base widened.

44
As observed by both Church Hill and an American tax payer, and not neglecting findings by
the researcher in KCCA, people hate taxes though they are necessary for any economy to
stand. Therefore as far as Uganda is concerned and KCCA in particular, tax collectors and
other relevant tax authorities should work hard to ensure that the basic principles of taxation
are applied correctly. This will make tax payers responsible to pay taxes.

There is need to motivate the tax collectors since this is a tempting job. In order to enjoy the
good fruit from the collected taxes, good work incentives and welfare can reduce on the level
of corruption in tax collection.

To improve revenue collection from market vendors while minimizing collection costs, the
company needs to employ committed people who are trustworthy.

KCCA needs to improve personal training and logistical support. It also needs to recruit more
law enforcement officers and train them. All this is necessary to improve on efficiency.

KCCA should provide proper accountability for the tax revenue collected. It should give back
to the market vendors through some services such as rodents control among others. This will
increase the willingness of tax payers to pay since they know that they are the very
beneficiaries of the taxes they pay.

Proper record keeping is necessary especially as regards tax payers and this will ease the
work of administrators when collecting taxes from them and thus the rate of tax evasion will
be lessened too.

45
46
47
Reference;

48
Zake, (1998). “Changes in the East African Tax Administration Environment: The
Challenges of managing the change”, A Paper presented on the 9th East African Revenue
Authorities Technical Committee Meeting at the Grand Imperial Hotel,13th -15th January,
1998, Kampala, Uganda. Lubega, (2000),”Income Tax Evasion In Uganda‟s Informal Sectors
in Uganda”, A Dissertation Submitted by Turyamureeba.Julius At St. Lawrence University,
Kampala Daily Monitor and New vision Publications, (June 2005-June 2008), Report from
the Uganda National Budget. Paper, (November 2009), Quarterly Publication of the
Economic Policy Research Centre 55 In Tax Reform In Developing Countries. Duke
University Press, Durham and London pp. 315-330. Bird. R.M.
Allingham, M.G. and Sandmo, A(1972) Income Tax Evasion: A Theoretical analysis, Journal
Of Tax and Public Economics. Vol.1 No.3/4pp.41-57. Abigaba, M. Jr. (1998) Financial
Decentralization and Social Service Delivery in Uganda (1993-1998). A Study of Personal
Graduated tax and Revenue collection performance.( Public Administration and
management) Dissertation. Muk(Un Published) Bird, R.M (1989) The Administrative
Dimension Of Tax Reforms In Developing Countries. (1991) The Administrative Dimension
Of Tax Reform: Reflections On Experience. The Policy in Developing Countries Research
Paper. World Bank Publication. Washington DC. Bird, R.M, Ebel, R.D, Wallinch, C.I (1995)
Fiscal Decentralization in Transitional Economies: From Command To Market. World Bank
Publication. Edwardo, M.R.A and Hines, J.R. Jr. (1998) Understanding Tax Evasion
Dynamics. Office Of Tax Policy Research. Research Paper Series No. 98-22. Etzioni, (1986)
Tax Evasion And Perceptions Of Tax Fairness: A Research Note Journal Of Applied
Behavior Scient Vol. 2 No.2 pp.177-185. Iga, M.P (1999) The effect of Administrative
Procedures On Income tax Collections. BABA Dissertation (Un Published ) Shalinzi, Z And
Squire, L (1989) Tax Policy in Sub-saharan Africa: A Framework For Analysis . World Bank
Policy and Research Publications No.2 Local Government Act (1997) 53

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Thursk, W (1991) Lessons From Tax Reform: An Overview. Tax Policy In Developing
Countries Conference Paper. World Bank Wallschutzky, I.G (1983) The Effect Of Tax
Reform On Tax Evasion. World Bank Research Paper. Tayebwa, B. (1992). Basic
Economics. (2nd Edition), Kampala. Mugerwa, G. W. (1990). “Taxation And Economic
Development”, A Paper presented to members of the Uganda Manufacturers Association,
Kampala Uganda. Montgomery, R.,Surdano, S., M., Syaikhu, U., Nina, T.,Vita, F.(2000).
“Deregulation of Indonesia‟s Inter regional agriculture trade” Un Published Paper prepared
by SMERU‟s Persepsi Daerah Team. Musgrave, R. (1983). “Who should tax ,where and
what?”in charles McClure, Jr (ed), Tax Assignment In Federal Countries (Camberra: The
Australian National ) University. V. (1992). Structural Factors and Tax Revenue in
Developing Countries. A Decade Of Evidence, In open economics: Structural and
Agriculture ed. By Goldin, I and winters Serwanga, J. (1992). Government Tax Revenue
Decline and Recovery: An empirical Analysis Of Uanda‟s Experience, 1970-1992: Thesis for
T.Julius EPP: Faculty of business Administration In st.lawrence University,kampala.
Musgrave, R, Musgrave, P.B.(1998).Public Finance in theory and Practice, 5th Edition,
McGraw Hill Book Co.,New York, U.S.A. Tanzi , V. (1987). “Qualitative characteristics of
the Tax Systems of Developing Countries”, In Theory of Taxation for Developing Countries,
New York, Oxford University Press. 54

50
 FACULTY OF ECONOMICS AND MANAGEMENT/IACE TAX EVASION AND
REVENUE COLLECTION PERFORMANCE
PILOT SURVEY
Questionnaires to be filled by respondent
Dear Respondent,
The Researcher is a student at St. Lawrence University pursuing Bachelor’s Degree in
Accounting and is carrying out a study on the effect of tax evasion on revenue collection
performance in Uganda with Kampala Capital City Authority as my case study. The case
study will help administrators and tax collectors on how to reduce tax evasion and improve
on revenue collection performance. You are therefore kindly requested to complete this
questionnaire by filling in the space provided and by ticking the most appropriate answer by
responding to the extent to which you agree or disagree with the statement. The information
given will be confidentially handled and used for academic purposes only. Thank you for
participating and making this research a success.
SECTION A
GENERAL INFORMATION
For the following, Tick the most appropriate in the box provided.
1. Gender of the respondent
Male Female
2. Marital status of the respondent
Married Single Divorced Widowed
3. Age in completed years
Below 18 yrs. 18-28yrs 29-39yrs 40yrs and above
4. Level of education.
None Primary Secondary Tertiary
University
5. Employment engaged in
Market vendor KCCA Officials

51
 SECTION B
FACTORS FOR REVENUE COLLECTION PERFORMANCE
STRUCTURED QUESTIONS (fill in the space provided)
(i) What are factors that contribute to revenues collection?
1. Level of income of the tax payers
2. Existence of various act
3. Willingness of tax payers
4. Level of tax administration
(ii) Sensitization programs exercised by the KCCA official in attempt to collection?
1. Early assessment of taxpayer
2. Publishing of budget and final account of KCCA
3. Review programs on benefits of paying taxes
(iii) The numbers of tax payers have increased resulting from applying the number of
sensitization programs about tax.
Yes No
For the following tick the most appropriate in the space provided
KEY
SA-Strongly Agree NS-Not Sure SD-Strongly Disagree.
A-Agree D- Disagree
SA A NS D SD
1 Revenue collection procedures greatly influence the level of
revenues collected
2 Due to inadequate revenue collection measures, revenue has
always fallen short of targeted
3 Revenue collection policy and the tax base greatly influences
amount of revenue collected
4 Not all market venders pays the full amount of tax levied on
them
5 A big percentage of tax payers usually adhere to payment of
taxes levied on them
6 Tax revenue collected has an effect on the overall revenue
output performance.
7 Sensitization program like tax education have always been
exercised by KCCA tax officials.
8 Most revenue are usually lost through tax evasion
9 Taxpayers are usually aware of what amount to pay and when

52
 they should pay
1 Tax revenue collection would increase if there is great
0 reduction in tax evasion among market venders.

SECTION C
TAX EVASION CAUSES
STRUCTURED QUESTIONS (Fill in the space provided)
(i) Which of these is among the causes of tax evasion among potential tax payers in KCCA?

53
 1. Poor record management.

2. High tax rates.

3. Old legislation and policy in revenue generation.

4. Ignorance among tax payers about usefulness of Revenues from taxes.

5. Most of the taxes are indirect taxes.

For the following tick the most appropriate in the space provide
KEY
SA-Strongly Agree NT-Not Sure SD-Strongly Disagree
A-Agree D-Disagree
Extent Of Agreement SA A NS D SD
1 market vendors naturally don’t like paying tax because they affect
their profitability
2 taxpayers do not see the value of paying taxes because tax returns
are not seen
3 some market vendors hide some of their goods during tax
assessment to reduce their tax liability
4 Proper books are not always presented when assessing taxes.
1 Measures are always taken to ensure venders submit in their taxes
to tax collectors
2 Tax official do update their registers every term of assessment.
3 Those who default taxes are always followed up and given serious
penalties by KCCA official
4 Tax collectors usually treat well the tax payers during tax
collection process.
5 Tax revenue collected has always been fallen short of targeted due
tax evasion.
6 Due to presence of tax penalties, a number of tax payers have
increased.

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