Value Added Tax and Cost of Living in Selected Divisions of Kampala Uganda

ABSTRACT This report presents the approach that was used by the researcher to achieve the objectives of the study. The topic ofthe study was value added tax and cost ofliving in Kampala. The purpose of the study was to establish the degree of effectiveness of value added tax in Kampala. The general objective was broken down into four spec~ic objectives which are: To determine the value of VAT in selected divisions ofKampala, to establish the degree of the cost of living in selected divisions Kampala, to determine ifthere is a sign~Icant relationship between VAT and the degree of the cost ofliving and to recommend ideas and suggestions to policy makers based on the findings of the study. These spec~ic objectives were supported with five research questions which were asked during the course of the study and one hypothesis. The researcher selected three divisions from the five in Kampala. The study covers the period 2000-2011. The targeted sample size was 120 and actual sample size was 116 which was purposively and randomly selected. The study employed both qualitative and quantitative approaches, specifically descriptive co-relational design. In the collection ofdata survey method specifically questionnaires were used. The findings show that: Most of the respondents had stayed in Kampala for more than five years, most had heard of and knew the extent of VAI~ and most agreed that the price of commodities in Kampala is related to VAT Based on the above, the study concludes that taxes are a big component or determinant of the final price of goods and services and therefore affect the cost of living adversely. The study recommends that the government should as a matter of urgency look at ways of controlling the current rapid price increments, fix the price ofcommodities andfind ways ofboosting the earnings ofthe citizens.