A smartphone user. Uganda's government to review the social media and mobile money taxes. FILE | NATION MEDIA GROUP
Uganda announced Tuesday that it had collected Ush7 billion
(about $1.8 million) from newly-introduced levies on social media use
and mobile money transactions.
Minister
for Finance David Bahati said that although Cabinet approved a
reduction of excise duty on mobile money from 1 per cent to 0.5 per
cent, the drop would not affect earlier government estimates of
collecting Ush118 billion ($31.5 billion) from the tax that has stirred
public outrage.
Mr Bahati said that a
Monday Cabinet meeting at State House Entebbe agreed to apply the tax
only on withdrawals and not money that was being sent.
“As
long as you are not cashing out money, you will not pay the tax but if
you do, you will make the contribution of 0.5percent. We expect that if
we charge the levy of 0.5 percent on withdrawals only, we will still
raise Ush118 billion which is slightly above Ush115 billion we had
estimated,” the minister said.
The amended Bill, Mr Bahati said, will be presented on Wednesday in Parliament for the first reading.
According
to the official, about Ush11 trillion ($2.9 billion) is sent via mobile
money platforms while Ush23 trillion ($6.1 billion) is withdrawn every
month.
“The estimation we had as we started, we
expected to have Ush2.5 billion ($668,000) from mobile money but the
week we have implemented this, we have raised Ush5 billion ($1.4
nillion).
“We are ahead of target.
Nothing in the budget will suffer after reducing the tax from 1 per cent
to 0.5 per cent because transaction of 23 trillion will raise Ush118
billion,” he said.
ICT Minister
Frank Tumwebaze said the initiative is supposed to discourage cash
transactions for easy monitoring and security purposes.
“This
business of mobile money services started as a trial. Even telecom
companies were never licensed for that. Their licenses kept on being
amended to value added service. But the service has grown to 63 per cent
of the GDP. That tells you that networks have to be upgraded. That
tells you Ugandans are saving money not banking yet the banking sector
is contributing to GDP,” Mr Tumwebaze said.
Social media tax here to stay
However,
on social media tax, Finance Minister Bahati said people who wish to
access social media will continue to pay Ush200 (about $0.05), insisting
that there were moral justifications for the levy.
President Yoweri Museveni also affirmed that the tax was here to stay despite public uproar.
“The
social media users have no right to squander the dollars I earn from my
coffee, my milk etc by endlessly donating money to foreign telephone
companies through chatting or even lying and, then, they are allergic to
even a modest contribution to their country whose collective wealth
they are misusing,” said Mr Museveni in a statement he posted on his
Facebook page earlier this month.
On
the issue of blocking VPN which other users have opted for to avoid
paying OTT tax, Mr Tumwebaze said patriotic citizens should pay if they
want to demand services from the government.
“Whether
UCC succeeds in blocking VPN or not, I am not enthusiastic about
blocking it. Ask yourself how much you are spending on data for you to
download VPN to enable you bypass capacity?” he asked.
“If
you are really a committed Ugandan and want services from your
government, why are you motivated to contribute money 30 times higher
than the OTT tax to the innovator of VPN? Why don’t you want to
contribute to your economy and when Bahati or Kasaija are borrowing we
are bashing them for borrowing. This why I call for logical debates.”
Report by PATIENCE AHIMBISIBWE and ULYSSE OSMONT
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