This paper uses the 2012/13 Uganda National Household Survey to analyze the redistributive effectiveness
and impact on poverty and inequality of Uganda’s revenue collection instruments and social
spending programs. Fiscal policy – including many of its constituent tax and spending elements
– is inequality-reducing in Uganda, but the reduction of inequality due to fiscal policy in Uganda
is lower than other countries with similar levels of initial inequality, a result tied to low levels of
spending in Uganda generally. The impact of fiscal policy on poverty is negligible, while the combination
of very sparse coverage of direct transfer programs and nearly complete coverage of indirect
tax instruments means that many poor households are net payers into, rather than net recipients
from, the fiscal system. As Uganda looks ahead to increased revenues from taxation and concurrent
investments in productive infrastructure, it should take care to protect the poorest households from
further impoverishment from the fiscal system.