How Parliament endorsed mobile money, social media tax
For hours, the State Minister for Planning David Bahati tried in vain to beat off a spirited fight from opposition and some moderate NRM legislators who argued against the introduction of Excise duty on Social media and the mobile money service.
The opposition MPs took advantage of the absence of the NRM colleagues who were next attending a caucus meeting, convened by their party chairman, President Yoweri Museveni.
With a loss in sight for the government side, a message was sent to the caucus meeting and the MPs were sent with orders to go and vote for the new law.
“We had argued our case very well and had knocked off most of the unfair taxes they are introducing until when the voting machines came in, the stakes changed. Many of them shouted Aye but in actual sense didn’t know what they were voting for,” Kassanda North MP Patrick Nsamba Oshabe said.
Indeed, some NRM MPs like Mityana South’s Henry Makumbi admitted to having voted in ignorance.
“I opposed that law in the committee but when they told us to come and vote for it, I just said Aye,” Makumbi said.
THE NEW LAW
With the passing of the law, social media users will now pay a daily levy of Shs 200 for using platforms such as WhatsApp, Facebook, Viber, Twitter among others.
This is expected to fetch government a sum of Shs 284bn.
According the now Excise Duty Amendment Act 2018, government will be charging the tax on telecommunications service operators providing data for accessing Over The Top Services (OTT).
This is because the voice and messaging traffic has migrated from conventional voice calls and messaging to voice over the internet and online messaging, through social media applications which don’t attract excise duty, unlike voice calls that attract VAT and excise duty.
The proposal to have a ‘social media’ tax was suggested by Museveni when he wrote to both the Minister of Finance, Planning and Economic Development Matia Kasaija expressing disappointment over the failure by Uganda Revenue Authority (URA) to be innovative and broaden the taxable base.
Museveni argued that by taxing the social media platforms, it would discourage what he called rumour mongering.
Mobile money transactions carry a 1% tax, and from this, government expects to collect Shs 115bn.
Members of the Finance Committee supported the introduction of this tax on grounds that money transactions had migrated from the traditional payment systems like banks to the digital platforms.
“It is therefore important that taxes be levied on such platforms. Using mobile money is a choice as there are other methods of payment which are already attracting taxes. This proposed tax will generate more revenue and broaden the tax base,” Loy Katali, Vice Chairperson Finance Committee said.