Members of Parliament after weeks of heated debates and protests from both the public and government on Wednesday finally approved the proposal to impose excise duty on social media platforms and mobile money transactions.
If assented to by President Yoweri Museveni, the law will see Ugandans pay Shs200 for daily use of social media platforms (like WhatsApp, Skype, Facebook, Viber etc) as well as get charged 1% for every mobile money transaction made beginning July 1, 2018.
Government hopes to generate Shs115 billion by levying 1% for every mobile money transaction and Shs284 billion from taxes on social media, according to the finance ministry.
The initiative has however gathered mixed feelings with opponents saying that taxing social media is like taxing content, which is a minus for national development of knowledge. Others say with these taxes, government is targeting to stifle public engagement on the platforms.
Social media has become one of the main platforms through which Ugandans voice their opinions on national matters, and in 2016, during presidential elections we saw government direct internet service providers to switch off social media.
“It’s part of a wider attempt to curtail freedoms of expression,” Rosebell Kagumire, a human rights activist and blogger, said as quoted by Reuters.
For his part, Anthony Katamba, MTN general manager of corporate services when the proposal was introduced by Museveni on March 31, he said, according to the Daily Monitor, the move to introduce taxes on social media was unprecedented, arguing: “Imposing excise duty on social media is taxing content. The data you buy gives you internet. Taxing social media is a tax on content. If the government goes ahead to implement the tax, it would be unprecedented.”
Even at parliament on Wednesday several MPs, including Leader of Opposition Winnie Kiiza, Bungokho North MP Gershom Sizomu Wambedde, Bukoto East MP Florence Namayanja, Kassanda County MP Patrick Nsamba Oshabe and Kyadondo East MP Robert Kyagulanyi put up serious resistance to the ratification of the bill, arguing that taxes are burdensome, diversionary and deceptive.
It should be recalled data costs in Africa are already among the world’s highest, according to digital advocacy group World Wide Web Foundation. There are no clear statistics for East Africa, but Kenya has the cheapest data costs, according to latest reports.
Proponents of the tariffs targeting mobile money transactions, for instance, argue that it will curtail the government’s plan to boost financial inclusion since mobile money had led to an increase in the number of banked Ugandans.
“When this mobile money transactions happened, one of the key beneficiaries were the farmers who are our people at the lowest epitome of society. And there are statistics indicating that just the increase of services of mobile money across the countryside brought on board farmers to a tune of about 53 per cent in the financial sector,” Kumi Woman MP Monica Amoding was quoted by Uganda Radio Network.
Silver Kayondo, a lawyer, who also co-owns an innovation hub in Kampala said to SautiTech that he “think(s) it will have negative and unintended consequences for financial inclusion because it will increase transactional costs.”
President Museveni who introduced the idea, however, says that government wants to expand its tax base by hunting for more sources of revenue and thus collecting excise duty on airtime instead of only VAT is one of them.
In the 2016/17 financial year, URA collected Shs13 trillion which is less than half of the national budget of Shs29 trillion. With these new taxes, government expects to collect a total of Shs16.2 trillion in the 2018/2019 financial year with a projected growth of 7.6 percent.
It should also be recalled that Minister of ICT and National Guidance has previously said that the taxes are meant to discourage Ugandans from using foreign social media apps and develops local apps that won’t be taxed.
Below are some of the other reactions from Ugandans on the new taxes.
— Parliament Watch (@pwatchug) May 30, 2018
This is the same Abraham Byandala involved in causing financial loss of over UGX24,700,000,000 meant for the upgrade of the Mukono-Katosi road, talking about "If we want to develop as a country."
Same guy who beat up a journalists[Lady] at the Anti-Corruption Court. 😒😒😒 https://t.co/fYIRU383c6
— ands JEFF (@andsjeff) May 31, 2018
Hon Anna Nankabirwa: I support the 1% percent tax on mobile money transactions. When we look at our burdened we are with loans, how shall we service them if we are not taxed. Let us all have an obligation to pay taxes as we demand for the service. #PlenaryUg
— Parliament of Uganda (@Parliament_Ug) May 30, 2018
I never used Mobile Money that much until my bank introduced a system that allowed me to send money from my account to my phone. I have a trusted boda guy who can deliver cash anywhere so I will transact less generally with the new tax. #MMTax
— Grace Natabaalo (@Natabaalo) May 31, 2018
Yesterday someone insisted that I pick the money yet he is been using MM to send it. That's when I realized p'ple are already adjusting b'se of #MMtax
— Moses M. Mwebaze (@MosezM) May 31, 2018
Exactly, people had started taking up the option of transacting from Mobile Money to Bank and Vice Versa, the 1% tax on Mobile Money won't attract more users to join but rather users will be leaving the option [I will be in those who leave 😜] . https://t.co/7W06wW2Edf
— ands JEFF (@andsjeff) May 31, 2018
I dont understand the kind of economist and tax experts we have in our motherland. Instead of promoting the service by making it cheaper, safe and convinient for most people in the informal sector, What do we do? increase tax…
— Meno Charles (@owekmeno) May 31, 2018
Parliament passed the Excise Duty Amendment Bill 2018 yesterday slapping 1% tax on Mobile Money and UGX 200 per day on Social Media.
But as long as the Government has financial indiscipline, wastage and leakage through corruption, it may never achieve its budgetary objectives.
— The Ugandan Lawyer (@UgandanLawyer) May 31, 2018
I want to see how the 1% tax on Mobile Money transactions turns out in a years time, the cattle keepers are now playing hide and seek with the economy.
— ands JEFF (@andsjeff) May 30, 2018
Lol. So you all don't know our appeasement politics? A few days before reading the budget, His Excellency will call a press conference to discredit Parliament thus declaring the MM and Social Media taxes void! I am watching.
— Mathias Ssemanda (@MathiasSsemanda) May 31, 2018
This government is very slow,this could have been done many years ago but they are bringing it right now, infact they could have charged like 500shs per 24 hours for social media
— woira michael (@woira_michael) May 31, 2018
Not sure what to make of the decision by MPs to approve tax on social media and mobile money. It defies logic. There must have been a concession. More like "mpa nkuhe" ("If you pass this tax, I will not reject your request for …).
Thank you for increasing the tax base.
— Mark Keith Muhumuza (@mumakeith) May 31, 2018
While our Ugandan parliament is busy passing bills imposing a 1% levy on Mobile Money and Social media in South Africa they have just passed the Minimum wage bill of R20 (USD 1.6) per hour and even then the debate rages on on whether this is good enough! #reflections
— #ShanaSays (@RukhShana) May 31, 2018
Find more reactions here.