The main objective of this study was to establish the effect of taxation on the cost of living with the general objectives being; to establish the effects of income tax, VAT, excise tax and export duty on the cost of living in Uganda. The study used quantitative secondary data; data on tax revenues and consumer price index collected from Uganda Revenue Authority and Bank of Uganda respectively. The researcher adopted the multiple regression analysis of the ordinary least squares (OLS) method to analyze the data collected for the purpose of this study. The research revealed that the average CPI is 111.72 implying that cost of living increased by 11.72 percent every year for the past fifteen years with reference to the base year 2009/10. With maximum CPI being 169.69 implying the cost of living increased by about 69.69 percent from FY 2009/10 to FY 2017/18. Also, the average tax revenues from income tax, value added tax, excise duty and export duty were UGX 1993.001 billion, UGX 1021.535 billion, UGX 402.4304 billion and UGX 548.4889 billion respectively. Furthermore, the results of the regression; the imply that on average, a unit increase in income tax rate leads to a 5.7 percent increase in the cost of living when all other independent variables are held constant, a unit increase in value added tax rate leads to a 3.8 percent increase in the cost of living when all other independent variables are held constant, a unit increase in excise duty rate leads to a 14.4 percent increase in the cost of living when all other independent variables are held constant and a unit increase in export duty rate leads to a 4.6 percent decrease in the cost of living when all other independent variables are held constant. The researcher found out that there is positive and significant overall effect of taxation on the cost of living in Uganda. Furthermore, it was found that income tax, value added tax and excise duty had a statistically positive effects on the cost of living though value added tax and excise duty were not significant. Contrary to these results, export duty had a negative but insignificant effect on the cost of living and this is desirable to the people of Uganda as its increase makes the cost of living relatively cheaper and affordable to the common Ugandan. Based on the outcome of this study, the following are recommended; Reforms that improve incentives, reduce existing distortionary subsidies, avoid windfall gains, and avoid increase in the prices of goods and services will have more positive effects on the long-term desired and affordable cost of living in the economy, to revise its macroeconomic policies relating tax revenues to improve the efficiency and productivity of recourses allocation in the economy and to reexamine its tax revenues by way of increasing tax rate and introducing new taxes in such a way that it does not distort the prices of goods and services but rather improves on the standard and cost of living in the economy.

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