Written by Pennie Igaga.

The issue of taxi operators’ fees (levies) between taxi operators and KCCA keeps getting more heated. Broken down, reports indicate that each taxi in Kampala pays a road monthly user fee of Shs. 120,000. With that considered, each taxi is also expected to pay money to every local government it drives through. This means that depending on the area the taxi operates in, the taxi operator may have to pay multiple road user fees- which they say is double (triple etc.) taxation.

The Prime Minister Dr Ruhakana Rugunda recently asked the Local Government minister, Mr Tom Butime to urgently investigate the taxation of taxi operators in the country and to streamline the taxation system in order to dispose of this long running disagreement between local government and taxi owners.
In carrying out this probe, there are a number of canons of taxation/ principles under taxation that have to be considered:

To begin with, Adam Smith, one of the propagators of taxation principles, stresses that taxation must ensure justice. To him, there are four main canons or maxims of taxation on the administrative side of public finance which are still recognized as classic:

1. Canon of Equality or Equity.
The canon of equality or equity implies that the burden of taxation must be distributed equally or equitably in relation to the ability of the tax payers. Equity or social justice demands that the rich people should bear a heavier burden of tax and the poor, a lesser burden. Hence, a tax system should contain progressive tax rates based on the tax-payer’s ability to pay and sacrifice.
The media has reported that multiple taxation has left the drivers so poor and vulnerable to road accidents as they tend to work for long hours to compensate what has been taken away from them by various local governments and Kampala City Council Authority (KCCA).

2. Canon of Certainty.
Taxation must have an element of certainty. The time of payment, the manner of payment, the amount to be paid ought to be clear and plain to the contributor and to every other person.

3. Canon of Economy.
This principle suggests that the cost of collecting a tax should not be exorbitant but be the minimum. Extravagant tax collection machinery is not justified. According to Adam Smith, “Every tax has to be contrived as both to take and keep out of the pockets of the people as little as possible over and above what it brings into the public treasury of the state.”

The cost of collecting tax may be a reason for exorbitant tax payment. The collection of taxes should be economically fair. There is a need for the tax master to put this into consideration when probes are being carried out.

4. Canon of convenience.
A tax should be collected in a convenient manner from the tax payers. Adam Smith stresses: “Every tax ought to be levied at the time or in the manner in which it is most likely to be convenient for the contributor to pay it.”

This suggests that a tax should be determined on the ground of its economic, social and political expediency.
Equity in taxation refers to fairness or justice in the distribution of the tax burden. Since taxation implies a burden or sacrifice on the part of the tax payer, modern economists put great emphasis on justice in taxation and state that taxation should be based on the principle of equity so that direct money burden as well as real burden should be distributed in a just manner.

By Pennie Igaga

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