Civil Society Organizations (CSOs) have called for structural dialogue with government on issues regarding taxes on mobile money transactions and social media.
Last month, Parliament approved the Government’s proposal to levy a 1% tax on all mobile money transactions and the daily sh200 for over the top (OTT) services on social media, causing public uproar.
However, on Monday, Government agreed to amend the Excise Duty (Amendment) Act 2018, that had introduced a 1% tax on all mobile money transactions to 0.5% but still the public is not happy.
Through their umbrella organisation Civil Society Budget Advocacy Group (CSBAG), CSOs said that they appreciate the government’s proposals and efforts to raise revenue, but reducing the tax to 0.5% is still harmful to the vulnerable poor Ugandans who have greatly adopted the digital financial service.
“We know right now everyone is panicking over OTT but we are appealing to government to look more into indirect charges like charging transaction fees and increasing excise tax from 15% to 20%, than imposing a direct tax on the use of mobile money. They should extend this tax to banks, charging banking transactions including agency banking and ATM withdrawals,” noted Julius Mukunda, the executive director of Civil Society Budget Group (CSBAG).
Mukunda also noted that the tax has an impact of restricting access to information for whoever can afford a data bundle but cannot afford sh200 tax.
“We are seeking for a dialogue with President Museveni and cabinet so that we give them our views based on research. There is a lot of unfairness with this new tax. You cannot expect a student to pay the same fees with a lecturer or a Member of Parliament. Though there was no research done, government should adopt tax alternatives that are less harmful to the economy and its people,” Mukunda noted.
Addressing journalists, Henry Mugisha, the executive director of Water Governance Institute said that though some people call them enemies of development, they are just helping government to give them submissions based on research.
“We realised the motive of government was to reduce the gossip that always goes on social media, or they wanted to throw a stone in the bush to see what happens but they are looking in the wrong places. Government should just scrap the plan of taxing social media. They should instead equip more Uganda entrepreneurs to invest more in the country so that the money stays in the economy,” Mugisha noted.
In her speech, Regina Navuga, a programmes officer at Southern and Eastern African Trade Information and Negotiations Institute (SEATINI-U), said that young people who have come up with apps are going to pay for the tax but they will not find clients because their clients will not afford the taxes.
Juliet Akello, a policy officer at Uganda Debt Network said that the new tax is one that is going to disorganise the economy and jeopardise efforts of Bank of Uganda’s financial literacy.
“Government should start taxing informal sectors like those people who work in Owino market and bodaboda cyclists to get more revenue but they should leave social media tax,” noted Akello.