Shifting Tax Burdens Through Exemptions and Evasion: An Empirical Investigation of Uganda

Posted: 29 Feb 2008

Date Written: September 2006

Abstract

This paper investigates the impacts of tax reforms implemented in Uganda in the mid-1990s on the prevalence of tax evasion and exemptions among firms, and their effects on the distribution and dispersion of tax burdens. Based on firm-level data collected from 243 firms, we observe that evasion and exemptions were widespread and that their prevalence actually increased during tax reforms. We use three-stage least squares to simultaneously estimate tax burdens, evasion and exemption patterns in 1995 and 1997. We find that tax exemptions benefit large businesses to a disproportionate degree, while evasion is more common among small businesses. This creates a situation in which medium-sized firms shoulder a disproportionate tax burden.

Suggested Citation

Gauthier, Bernard and Reinikka, Ritva, Shifting Tax Burdens Through Exemptions and Evasion: An Empirical Investigation of Uganda (September 2006). Journal of African Economies, Vol. 15, Issue 3, pp. 373-398, 2006, Available at SSRN: https://ssrn.com/abstract=1096821 or http://dx.doi.org/10.1093/jae/ejl022

Bernard Gauthier (Contact Author)

HEC Montreal ( email )

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HOME PAGE: http://https://www.hec.ca/en/profs/bernard.gauthier.html

Ritva Reinikka

The World Bank ( email )

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MSN3-311
Washington, DC 20433
United States
202-458-2893 (Phone)

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