The Political Economy of Tax Reforms in Uganda: The case of Business Interest Groups’ Influence

Since taxes are so consequential to every business decision, businesses try to influence tax policies and, over time, the tax system comes to reflect a large number of political bargains made by the state with different business interest groups (Herbst 2000). In Uganda, business interest groups are organized in an apex body known as the Private Sector Foundation of Uganda (PSFU). When business works through strong private sector organisations, rather than allowing individual companies to lobby for private benefits, the government’s rent-seeking behaviour is discouraged (Kalema 2008). However, business interest groups such as the PSFU are generally perceived to be weak and unable to effectively lobby for long-term policies or hold governments to account (Maxfield & Schneider 1997, Kalema 2008, Bwalya et al 2011).

Tax reforms are introduced every financial year through different pieces of legislation and these tend to increase the tax burden on the private sector. This precipitates conflict between the state or its agencies and business interest groups. My dissertation examines the political economy of tax reforms and specifically how business interest groups influence tax policies to promote their own interests.

The law is pertinent to taxation and revenue collection and to this end the Constitution of Uganda provides that no tax shall be imposed except under the authority of an Act of Parliament. Consequently, I select some cases of proposed tax reforms, first, based on the achievements that PSFU reports to have made in the area of taxation and, second, from debates on Bills of Parliament during the budget cycle. The cases represent instances where business interest groups attempt to constrain the State’s capacity to tax by preventing the passing of clauses of Bills and implementation Taxation Acts or parts thereof. Some of the cases are about how business interest groups influence tax exemptions and incentives.

Using court cases, I discuss the use of litigation as a strategy both in instances when the legislation outcome is not favourable to the business interest groups and when it is used to change the status quo without pursuing the legislative process.


  • Bwalya.S.M., Phiri.E., & Kelvin Mpembamoto.K. (2011). How Interest Groups Lobby to Influence Budget Outcomes in Zambia. Journal of International Development.
  • Herbst, J. (2000). States and Power in Africa: Comparative Lessons in Authority and Control. Princeton University Press.
  • Kalema, S.W. (2008). Enhancing Government/Business Relations and Mobilizing the Business Sector to Develop Productive Capacities in Least Developing Countries. United Nations Conference on Trade and Development
  • Maxfield, S. & B. R. Schneider. (1997). Business and the State in Developing Countries. Politics & Society.