Ugandans react to approved taxes on social media, mobile money

Ugandans react to approved taxes on social media, mobile money

Uganda will start taxing users of social media apps like these if President Museveni signs the excise duty bill into law

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.

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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.

 

Find more reactions here.