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Taxation and Inequality in Uganda, 1900–1964

Published online by Cambridge University Press:  11 May 2010

Vali Jamal
Affiliation:
International Labour Organization, Addis Ababa

Extract

Amuch neglected topic in the economic history of Uganda is the contribution of fiscal policy to the inequality of income. While generalizations have been made about the heavy burden of taxation on Uganda's Africans and the bias in the distribution of government expenditure, no systematic analysis of these issues has been undertaken. It is my objective to rectify this shortcoming, and to provide estimates of the incidence of taxation on different races and sectors of the economy at different periods. This study should be of parallel interest to my earlier article, demonstrating the extent of inequality in Uganda, since it shows that the government's tax policy had a major effect on the distribution of income in the country. The present paper focuses particularly on the farmers, who have always been at the bottom of the distribution ladder, and attempts to answer the following questions. 1.) What were the major sources of tax revenue in Uganda, and what proportion of the revenue was derived from the farmers? 2.) What was the farmers' rate of taxation compared to that of other sections of the population? 3.) How was expenditure out of government revenue distributed?

Type
Articles
Copyright
Copyright © The Economic History Association 1978

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References

1 Asians in Uganda, 1880–1972: Inequality and Expulsion,” Economic History Review, 29 (Nov. 1976), 602–16Google Scholar.

2 To avoid any possible confusion, it should be stated at the outset that in the Uganda context the term “farmers” is synonymous with African farmers—and African farmers, up to the mid-1940s, synonymous with Africans. Throughout the period under discussion there were non-African estate owners, but their contribution to income was much smaller than that of the Africans. The same applies for non-farm Africans in the early period.

3 The expression comes from Jones' typology of the stages African countries have traversed in their emergence from subsistence economies to international trade. “Measuring the Effectiveness of Agricultural Marketing,” Food Research Institute Studies, 9, no. 3 (1970).

4 Lawrance, J. C. D., The Iteso: Fifty Years of Change in a Nilo-Hamitic Tribe of Uganda (London, 1957), p. 40Google Scholar. It should be noted that this statement relates to the early years. Even then one would not exclude the desire for consumer goods as a strong incentive for growing cotton.

5 Wrigley, Christopher C., Crops and Wealth in Uganda (Kampala, 1959), p. 16Google Scholar. Christopher D. C. Barlett, too, in a recent study underlines coercion as an important instigator of cotton cultivation in Uganda. See “Factors Affecting the Spread of Raingrown Cotton in Tropical Africa” (Ph.D. diss., Stanford Univ., 1974)Google Scholar.

6 Tucker, A. R., Eighteen Years in Uganda and East Africa (London, 1911), p. 288Google Scholar.

7 Proceedings of the Royal Colonial Institute, 36 (1904–05), p. 72Google Scholar.

8 Between 1900 and 1909 the rate was Rs 3 (Sh 4); between 1909 and 1920, Rs 5; and between 1920 and 1929, Fl 7.50 (Sh 15). In 1929 the rate was lowered to Sh 10 in Buganda, but raised to 1 gn (Sh 21) in the other cotton-growing districts, and instituted for the first time in Karamoja at the rate of Sh 5.

9 On coercion in Teso and Busoga see Vail, David J., “The Public Sector as Stimulus of Innovation Adoption in African Smallholder Agriculture: A Case Study in Teso District, Uganda” (Ph.D. diss., Yale Univ., 1971), p. 20Google Scholar; and Tuma, A. D. Tom, The Introduction and Expansion of Cotton in Kigulu County, 1907–1950 (Kampala, 1968), p. 13Google Scholar.

10 Uganda, , Report of the Treasurer on Revenue and Taxation, 1936 (Entebbe, 1937), p. 4Google Scholar. This was the official view; it can easily be refuted by pointing out that even in the early years—not to mention as late as 1936—consumer goods, especially cloth and utensils, provided a strong incentive for earning money.

11 Data on local taxes on Africans is scarce. Rates of taxation were obtained from ibid, and from Great Britain, Colonial Report, 1937. For additional information, see Buell, Raymond L., The Native Problem in Africa (London, 1965), p. 506Google Scholar.

12 The rate of taxation varied between 10 and 15 percent. These taxes were imposed in 1910 and rescinded sometime in the 1920s. Data from Blue Book, 1920, pp. A2–3.

13 Potential income is the income farmers could have received had there been no export tax or marketing board deductions; i.e., potential income = income farmers actually received + government taxes. It should be pointed out that the value of farmers' subsistence production has not been included in their income.

14 See Jamal, “Asians in Uganda.”

15 For the parallel situation in Kenya, see Brett, E. A., Colonialism and Underdevelopment in East Africa (London, 1973)Google Scholar and Wolff, Richard D., The Economics of Colonialism: Britain and Kenya, 1870–1930 (London, 1974)Google Scholar.

16 All data from Blue Book, 1927. Market dues were exclusive of the rent the smallholders had to pay local authorities.

17 The effect of such high fees on African entrepreneurship has been analyzed by Ehrlich, Cyril, “Some Social and Economic Implications of Paternalism in Uganda,” Journal of African History, 4 (1963)CrossRefGoogle Scholar.

18 It might be emphasized that the reference is to a clerk. Salaries of other officials were much higher. See “Asians in Uganda” for some representative salaries in this period.

19 Estimated as follows: In 1927, the bicycle fee raised £ 12,222, which at Sh 6 and 20 percent evasion implies fifty thousand bicycles. Motor car and motor cycle fees netted £5,842, which at Sh 100 implies just over one thousand motor vehicles. Data from Blue Book, 1927.

20 See Great Britain, Conditions in the Overseas Civil Service, 1936.

21 Total duty as a percentage of the c.i.f. value of imports. The standard rate of duty was 20 percent; other rates imply the application of specific duties. Great Britain, Joint Committee on Closer Union in East Africa (London, 1931)Google Scholar.

22 This figure is rather close to that of the Africans and might cause some doubts on that score. It should be remembered that with their very low incomes, the Africans' expenditure on consumer goods, mostly imports, perforce amounted to a high proportion of their cash purchase. In the case of the other races, their greater reliance on imported goods—food as well as non-food—resulted in a high proportion of their income being spent on imports. The same observations apply in relation to the discussion for 1964.

23 Uganda, Report of the Treasurer, 1936, p. 4.

24 Figures in the top row are total yardage imported (and locally produced in 1968) divided by total population. Figures in the bottom row show how much cloth an average farmer could have purchased with his income at the prevailing prices.

25 For further analysis of this period see, Elkan, Walter, “Central and Local Taxes on Africans in Uganda,” Public Finance, 23 (1958)Google Scholar.

26 This contrasts starkly with Governor John Hall's espousal of the surpluses on the grounds that government would get greater value for money in the future as prices fell. See Walker, David and Ehrlich, Cyril, “Stabilisation and Development Policy in Uganda: An Appraisal,” Kyklos, 12, p. 345Google Scholar.

27 The farmers' plight became a material cause in disturbances that took place in Buganda around this period. See Uganda, , Inquiry into Disturbances in Buganda Province, 1939 (Entebbe, 1939)Google Scholar.

28 Education expenditure figures from Blue Book, 1927, pp. 91–92. Statistics relating to hospitals from Colonial Report, 1937, p. 8, and conditions in individual hospitals from Blue Book, 1929.

29 Uganda, , Third Five year Plan, 1971/72–1975/76 (Entebbe, 1971)Google Scholar.

30 “Cotton and Coffee Growers and Government Development Finance in Uganda,” East African Economic Review, 10. See also his, “The Uganda Economy, 1945–60,” in Oxford History of East Africa, vol. III.

31 Hawkins, Edward K., Roads and Road Transport in an Underdeveloped Country: A Case Study of Uganda (London, 1962)Google Scholar.