Tax Lab · Policy design & simulation
Uganda Tax Expenditure Cost-Benefit Simulator
A real cost-effectiveness ranking of 30 sample tax exemptions. Select exemptions to remove and see the revenue actually recoverable, after a behavioural-response discount, not the full sticker cost.
The formulas are real. The 30 exemptions and their costs are the prototype's own sample portfolio, not an official MoFPED statement.
What a tax expenditure is
A tax expenditure is revenue the government deliberately forgoes through an exemption, relief or reduced rate, rather than revenue it fails to collect. Uganda publishes an annual tax expenditure statement alongside the budget. The policy question this tool explores isn't whether exemptions are good or bad in principle, it's which specific ones are buying the most jobs, investment or stated policy benefit per shilling forgone, and which are not.
The simulator
Every exemption below is scored and ranked by cost-effectiveness. Tick any to add them to a removal scenario; the panel below totals the gross cost and the revenue actually recoverable once each sector's behavioural-response discount is applied.
| Exemption | Sector | Cost | Cost/job | Score | Tier | |
|---|---|---|---|---|---|---|
Donor-Funded Project Relief NGO/NPO · DTA | Cross-sectoral | UGX 312.6bn | n/a | 28 | C · Low | |
Educational Materials Exemption Education · VATA S.16 | Education | UGX 156.3bn | n/a | 38 | C · Low | |
Petroleum Upstream Relief Energy · Petroleum Act | Energy | UGX 678.9bn | 212.2mn | 40 | C · Low | |
Non-Profit Exemption NGO/NPO · ITA S.19 | Cross-sectoral | UGX 234.8bn | n/a | 43 | C · Low | |
Air Transport Exemption Transport · VATA S.16 | Transport | UGX 167.8bn | 23.3mn | 43 | C · Low | |
Medical Supplies Exemption Health · VATA S.16 | Health | UGX 267.4bn | n/a | 44 | C · Low | |
Export Commodity Relief Agriculture · ITA S.19 | Agriculture | UGX 156.8bn | 18.4mn | 45 | C · Low | |
Pharmaceutical Exemption Health · EAC CET | Health | UGX 198.6bn | n/a | 51 | B · Moderate | |
University Research Exemption Education · ITA S.19 | Education | UGX 43.2bn | n/a | 51 | B · Moderate | |
Mobile Money Relief ICT · Excise Act | ICT | UGX 134.7bn | 15.3mn | 52 | B · Moderate | |
Equipment Import Exemption Mining · EAC CET | Mining | UGX 167.3bn | 40.8mn | 53 | B · Moderate | |
Diplomatic Exemption Diplomatic · Vienna Convention | Government | UGX 134.2bn | n/a | 54 | B · Moderate | |
Mining Royalty Relief Mining · Mining Act | Mining | UGX 234.6bn | 35.0mn | 55 | B · Moderate | |
REIT Exemption Real Estate · ITA S.21 | Real Estate | UGX 45.6bn | 38.0mn | 56 | B · Moderate | |
Inputs Exemption Agriculture · ITA S.21 & VATA S.16 | Agriculture | UGX 312.4bn | 6.9mn | 56 | B · Moderate | |
Export Processing Zone Manufacturing · EPZ Act | Manufacturing | UGX 334.7bn | 15.2mn | 57 | B · Moderate | |
Capital Markets Relief Financial Services · Securities Act | Finance | UGX 56.7bn | 23.6mn | 59 | B · Moderate | |
Pioneer Industry Status Manufacturing · ITA S.20 | Manufacturing | UGX 445.2bn | 13.9mn | 60 | B · Moderate | |
Livestock Exemption Agriculture · VATA S.16 | Agriculture | UGX 89.6bn | 7.5mn | 61 | B · Moderate | |
Affordable Housing Exemption Real Estate · VATA S.16 | Real Estate | UGX 123.5bn | 8.5mn | 62 | B · Moderate | |
Renewable Energy Exemption Energy · VATA S.16 | Energy | UGX 198.5bn | 36.1mn | 63 | B · Moderate | |
Electricity Generation Exemption Energy · VATA S.16 | Energy | UGX 143.2bn | 29.8mn | 63 | B · Moderate | |
Defence Procurement Exemption Defence · Constitution | Government | UGX 289.4bn | n/a | 64 | B · Moderate | |
Industrial Park Exemption Manufacturing · ITA S.21 | Manufacturing | UGX 278.3bn | 15.0mn | 67 | B · Moderate | |
SME Tax Holiday SME · ITA S.20 | Cross-sectoral | UGX 98.7bn | 2.8mn | 70 | B · Moderate | |
Software Exemption ICT · VATA S.16 | ICT | UGX 89.3bn | 7.1mn | 72 | B · Moderate | |
Public Transport Relief Transport · Excise Act | Transport | UGX 89.4bn | 4.7mn | 73 | B · Moderate | |
Microfinance Exemption Financial Services · ITA S.21 | Finance | UGX 78.4bn | 5.0mn | 78 | A · High | |
Tour Operator Relief Tourism · ITA S.21 | Tourism | UGX 67.8bn | 7.1mn | 80 | A · High | |
Hotel & Tourism Exemption Tourism · VATA S.16 | Tourism | UGX 112.4bn | 4.0mn | 83 | A · High |
Total portfolio
UGX 5,740.3bn
Selected for removal
0 exemptions, UGX 0bn gross
Net recoverable
UGX 0bn
after each sector's behavioural-response discount
Composite score (0-100): 40% inverted percentile rank of cost per job + 40% inverted percentile rank of cost per USD of FDI + 20% policy-priority score (social expenditures like health and education are scored on FDI and policy only, no jobs metric). Net recoverable revenue applies each exemption's sector discount rate (10% for low-mobility sectors like agriculture and health, up to 35% for high-mobility sectors like energy and ICT, 100% for treaty-bound government/diplomatic exemptions), reflecting that removing an incentive doesn't recover its full cost: some of the underlying activity contracts or relocates.
The formulas, exactly
Cost per job (UGX mn) = (cost × 1,000) ÷ attributed jobs
Cost per USD of FDI = (cost × 1e9) ÷ (attributed FDI × 1e6 × UGX/USD)
Composite score = 0.40 × jobs-cost percentile (inverted) + 0.40 × FDI-cost percentile (inverted) + 0.20 × policy-priority score
Net recoverable = gross cost × (1 − sector discount rate)
Attributed jobs use the government's own stated target where one exists; otherwise a share of total sector employment (the attribution factor you can adjust above). Attributed FDI is always a share of total sector FDI inflows. "Inverted percentile" means the cheapest cost per job or per dollar of FDI scores highest, exactly matching the prototype's own pct_rank_inv() function. Health, Education, Defence, Diplomatic and NGO/NPO exemptions are scored on FDI and policy priority only, since they have no jobs target by design.
Behavioural-response discount, by sector
Removing an exemption doesn't recover its full forgone-revenue cost: some of the economic activity it supported contracts or relocates. The prototype sets this discount by how mobile a sector's capital and activity is: 10% for low-mobility sectors (agriculture, health, education), 15-20% for medium-mobility sectors (transport, real estate, construction, tourism, manufacturing), 25% for finance, 35% for high-mobility sectors (energy, mining, ICT), and 100% for government and diplomatic exemptions, which are treaty- or constitution-bound and not realistically recoverable at all.
Sources (as designed, not independently verified for this sample): MoFPED tax expenditure statements (budget.go.ug); World Bank World Development Indicators (employment, FDI); Uganda Investment Authority; Bank of Uganda (exchange rate).