The introduction of Mobile Money and Over the Top services tax will disrupt Uganda’s financial inclusion agenda and the country’s pursuit of economic development, according to civil society organisations.
The civil groups say the tax that has been massively condemned in Uganda mainly targets the poor than the rich and will drive many young people who have been using the Internet to innovate into redundancy and poverty.
During a press conference on Sunday in Kampala, officials of the Tax Justice Alliance who are drawn from Action Aid Uganda and SEATINI-Uganda said, any government that works to lift people from poverty cannot resort to “imposing taxes which are non-cognisant of the principles of fairness, certainty, convenience and efficiency”.
“This will negatively affect the struggling players in the economy like micro, small and medium enterprises including farmers and further breed the growth of inequality, Ms Jane Nalunga, from SEATINI-Uganda said.
According to Ms Nalunga, the 2017 Uganda Communications Commission (UCC) report indicated that mobile money subscriptions stood 23.6 Million Ugandans, with 61 percent transactions below Shs45,000, which implies that the platform has been biggest driver of financial inclusion.
Citing the UCC “Postal, Broadcasting and Telecommunications Annual Market and Industry Report of 2016/2017 that placed internet penetration in Uganda at 45% from 31.3 % by December 2017, according to the Internet World Statistics, the activists say, the admirable increase is bound to suffer stagnation.
“The over the top services platforms have been key in driving the penetration of the net and greatly serving as platforms for educational material, spread of news and enhancements for civic engagement and also creating awareness about existing government programmes,” Mr Kimbowa said.
Mr Fredrick Kawooya, the campaigns manager at Action Aid Uganda said they believe that such the new taxes are symptoms of Uganda’s ailing economy.
“The country is facing enormous challenges especially regarding revenue mobilisation, allocation and utilisation,” he said. “Worse still, the utilisation of public resource in Uganda is highly questionable. There is a high rate of fiscal indiscipline characterised by a high rate of corruption. Furthermore, the government is increasingly relying on debt to for re-current expenditure which does not yield any returns to pay back the debt.”