Agricultural incomes key to improving tax revenue performance
The structure of the economy is an important factor in a country’s ability to collect taxes. For example countries that are heavily dependent on agriculture tend to be under-developed usually with low productivity smallholder farms that are subsistent in nature. This makes the sector potentially unprofitable and, therefore, difficult to tax in the short run. Recently Uganda’s gross domestic product (GDP), which is the sum of all economic activities in the country, was rebased from 2002 to 2009/10 base year. The rebasing means that we now have a more accurate estimate of the size and structure of the economy. The rebased GDP figures suggest that the structure of the economy has changed. As such, agriculture has overtaken industry as the second most important sector of the Ugandan economy. The contribution of the agricultural sector has increased from 22.2 percent to 23.3 percent, while that of industry has decreased from 26.3 percent to 18.1 percent. These changes show that t