Sources of local government extractive capacity: The role of trust and pre‐colonial legacy in the case of Uganda

Abstract

SUMMARYLocal government extractive capacity, as measured by the amount of graduated personal tax (GPT) collected relative to district wealth and population and, more qualitatively, as reflected in the nature of enforcement, varies considerably in Uganda. This article explores the reasons for this variation, first by investigating aggregate data at the cross-district level, using data on taxation as well as survey data from the Afrobarometer, second, by a focussed comparison of two districts, one with high-and one with lowextractive capacity. I find that generalised trust can explains some of the variation in extractive capacity across districts. The case studies trace the differences in trust and extractive capacity back to pre-colonial rule; the better performing district having had centralised rule, a tradition of tax-payment and a higher degree of social cohesion, while the poorer performing district had a more fragmented and less cohesive history of governance. The article thus points to the importance of understanding institutional path dependencies when assessing the feasibility of reform.

Pre-colonial centralization and tax compliance norms in contemporary Uganda

“…In the north of Uganda, such as in Acholi and Lango, people were organized in small chiefdoms. Generally, in these areas, there was no centralized administrative unit with a functioning tax system in precolonial times (Kjaer 2009).…”

“…During colonization, British rule in Uganda was characterized by a strong continuity of pre-colonial institutions of governance (Pratt 1965;Apter 1961). The British colonizers understood the importance of native authorities for implementing their policies and maintained local ethnic identities through their policy of indirect rule (Kjaer 2009;Bandyopadhyay and Green 2016;Ali et al 2019). They relied on traditional chiefs for collecting taxes, building roads, organizing schools, improving sanitation, and many other activities (Pratt 1965).…”

“…The chiefs also maintained their pre-colonial power of control over land resources and were able to retain a certain percentage of the revenue that they collected through tax (Mamdani 1996). In exchange for their collaboration with the British colonial rule, the chiefs gained more autonomy in terms of, for example, distributing rents and allocating land resources (Kjaer 2009;Bandyopadhyay and Green 2016;Ali et al 2019).…”

“…Before colonization, the political organization in Uganda was generally classified into centralized polities and stateless societies. In centralized polities, the states had a complex system of tax collection based on detailed information about the available taxable resource at the district level (Ssekamwa 1970;Reid 2002;Kjaer 2009). Tax collection in the historically centralized polities was undertaken in a hierarchical administrative structure where village chiefs identified who owned what, and the tax collected would be brought back to the king (Reid 2002).…”

What Explains the Recent Calls for the Reinstatement of a Tax Considered Unpopular? An Analysis of Graduated Tax in Uganda

“…8 Fourth, and related to the above, there was a general perception among taxpayers that the whole process of assessment, collection and use of the tax was riddled with corruption. In some cases tax officials were accused of embezzling revenue for personal gain (Kjaer 2009). Similarly, local government officials were accused of conniving with taxpayers for the latter to pay the least amount of taxes (Mugume 2004).…”