Social media taxation aimed at promoting local content - Tumwebaze

President Yoweri Museveni’s proposed taxation of use of social is purposely to curtail consumption of foreign content and use of foreign mobile applications according to minister of Information Communication and National Guidance, Frank Tumwebaze.

In a March 12 letter to the minister of Finance Matia Kasaija, Museveni suggested that users of social media platforms such as Facebook, WhatApp, Twitter, Skype, Viber among others should be taxed “a small fee of Shs 100 per day.”

According to Museveni, taxing use of social media would not only generate about Shs 400 billion annually for the government, but it also help stop social media users from spending most of their time ‘rumourmongering’ and become more productive.

Museveni’s proposal has been criticised widely by human rights activists and social media users, who viewed it as an infringement to the citizens’ right to freedom of expression in an era where Ugandans are critical of the government online.

Besides, they argued that further taxation on social media usage would tantamount to double taxations since the users have already paid taxes while purchasing airtime and data credit. But Museveni equated this to taxation of a shirt that pays excise duty at factory level and value added tax (VAT) at retail level whether the shirt is bought or not. 

Other critics argued that Uganda should also follow other countries that are instead cutting taxes on internet and technology so as to enable the poor to have connectivity and access the business opportunities it brings.

Tumwebaze said that the president’s proposal has not been taken in good faith yet it’s entirely for the development of local content. Giving an example of China that blocked messaging application, WhatsApp in favour of their local Wechat, Tumwebaze said that government has resolved to raise funds out of social media instead of completely blocking it.

“The president was simply challenging us to come up with our own content and take it online. The tax is on consumption of the content produced by foreign developers. Since Facebook or WhatsApp (companies) are not here for us to tax, let us tax you who are using their service,” Tumwebaze said.

He said that is so doing, government wants to see development of local mobile applications that shall be embraced by Ugandans tax-free and that “if we tax such a (local) app, you people can then say that this government is bad.”

Tumwebaze was speaking at the sidelines of the 19th ordinary session of the Africa telecommunications Union council of administration that he opened today at Hotel Africana in Kampala.

New broadband policy

The minister also noted that within the next three months, government will introduce a new broadband policy which will require telecommunication companies to share internet infrastructure amongst themselves.

“If Airtel has an optic fibre in Karamoja, another company should not invest in optic fibre there but should simply share the existing one. Competition shouldn’t be in putting up infrastructure but delivering services,” he said.

Currently, telecommunication companies offering internet services are using different infrastructure which they put up themselves and this, according to Tumwebaze, is why the internet service in Uganda is expensive since the said companies push down the investment cost to the consumer.

“We now want broadband infrastructure to be a public good with new and cheaper additions like the optic fibre and satellites especially in rural areas,” he said.

The minister also said that in the new policy, which has just gone through the first consultation stage, all telecoms will be required to operate nationally and not in a smaller geographical area to enable effective competition.

“If we give you a national licence and you are only operating within Kampala, it gives the other party a monopoly within the area you are not in,” Tumwebaze said.

Expert’s view

Internet expert, James Lunghabo, told The Observer that the proposal for infrastructural sharing is a good idea since it brings down the cost of investments by the telecoms hence reducing the burden on the end consumer.

“It also reduces the inconveniences we are always faced with when multiple companies dig across road pavements at different times thereby spoiling them. Shared infrastructure will reduce this damage,” Lunghabo said.

The cost by the companies of maintaining the infrastructure is also reduced since all of them can have a single maintenance team. The challenge however, Lunghabo said, is how the companies bill each other.

“They can have a reciprocal arrangement where say Airtel ferries traffic on behalf of MTN where it has infrastructure and MTN reciprocates where Airtel doesn’t have infrastructure,” he said.

The other option according Lunghabo is to get an independent company to manage the infrastructure then get paid by the telecoms.

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