Critical Analysis of Uganda's Reliance on Indirect Taxes over Direct Taxes: Implications for Domestic Revenue Mobilization: A review of tax classification, fiscal capacity and reform priorities

Debate about Uganda's domestic revenue mobilisation frequently contrasts indirect taxation with direct taxation, but conclusions depend on how tax categories are defined. This article critically examines the claim that Uganda relies on indirect taxes over direct taxes and considers the implications for revenue adequacy, equity, administrative capacity and economic planning. It combines a structured narrative review with descriptive analysis of selected Ministry of Finance revenue tables. The evidence distinguishes domestic direct taxes, domestic indirect taxes and international trade collections, recognising that collection location is not the same as economic tax classification. Domestic direct collections exceed domestic indirect collections in the reviewed financial years; however, the international trade category contains important consumption taxes alongside import withholding tax and other charges. The article reconciles the financial year 2024/25 category totals with separately reported stamp duty and refunds and avoids interpreting gross collection shares as final tax incidence. Findings indicate that the policy challenge is not a simple choice between two tax families. Sustainable mobilisation requires a broader and more credible income tax base, a functioning VAT credit and refund chain, proportionate compliance systems and accountable expenditure. The proposed framework links tax design and administrative capacity to net revenue, distribution and taxpayer confidence. The study concludes that reform should improve the productivity and fairness of the whole tax system rather than pursue an unsupported numerical preference for direct or indirect taxes.