President Yoweri Museveni has approved the Excise Duty (Amendment) (No.2) Act, 2018, implying that the proposed a controversial 0.5% tax on mobile money withdrawals takes effect.
The revelation was made by State Minister for Finance David Bahati during plenary at Parliament on Tuesday.
“The President assented to the Bill within the specified law so the President was within the period that is specified in the law. There is nothing special about this,” Mr. Bahati said.
He, however, revealed that telecom companies will still charge 1% on withdrawals until the act is gazetted.
“When the President assents to a Bill, it goes through the process of gazetting and after gazetting, it becomes law,” Mr. Bahati said.
Parliament in October passed the Excise Duty (Amendment) (No.2) Act, 2018 despite resistance from Opposition MPs and a section of NRM legislators who were defeated by the government that insisted that revenues from the tax were essential to finance the budget.
During the polarising vote in October, 164 MPs voted by roll-call and tally to support the controversial tax on mobile money while 124 voted against Clause 2 of Act that proposed the controversial tax.
Only 288 MPs voted out of the 463 MPs that constitute Parliament, meaning that some 175 lawmakers were absent when Parliament was making a critical legislation that affects the many Ugandans who use mobile money transactions.
MPs opposed to the levy on Excise Duty Amendment Act argued that there is no law to regulate the use of mobile money while also warning that mobile money services are already burdened with huge transaction fees which have registered a decline in the number of users.
CSOs, MPs and ordinary Ugandans also cited discrimination, lack of equity and lack of clarity on the collection mechanism as reasons why the new law would be problematic to implement.
Following the introduction of the tax on the transactions, Bank of Uganda (BoU) revealed that mobile money use fell by more than half a trillion shillings.