Taxation as a Tool for Environmental Protection in Uganda: A critical policy review with special reference to carbon-credit taxation

Environmental taxation can influence production and consumption while generating resources for public services, yet revenue collection alone does not demonstrate environmental protection. This article critically examines taxation as an environmental policy instrument in Uganda, with particular attention to carbon-credit transactions. It uses a structured narrative review of selected legislation, official publications and economic literature available up to 1 November 2026. The analysis distinguishes taxes on pollution, taxes affecting environmentally harmful products, administrative charges and the taxation of income from environmental activities. The findings identify a mismatch between readily administered tax bases and the environmental damage that policy seeks to reduce. Carbon-market governance has become more explicit under Uganda's 2025 regulations, but the corresponding-adjustment fee must be distinguished from income tax, value added tax and community benefit sharing. Illustrative models demonstrate how demand responsiveness, project scale and the choice between gross and net tax bases affect outcomes; these models are not estimates of Uganda's actual environmental impacts or tax liabilities. The article proposes coordinated fiscal guidance, transparent project accounting, proportionate administration, distributional protection and independent environmental monitoring. It concludes that environmental effectiveness depends on the relationship between tax design, credible enforcement, accessible alternatives and verified ecological results, rather than the environmental label attached to a revenue instrument.