Museveni on why Ugandans have to pay social media, mobile money tax
- Written by The Observer Team
This is a slightly abridged statement released from President Yoweri Museveni in response to public uproar against social media tax of Shs 200/daily and 1% on mobile money transactions. The taxes came into effect on Sunday, July 1.
Greetings. I am using social media to share with you the reasons for the social media tax and the mobile money tax. Our budget for this financial year is Shs 32 trillion. The taxes collected from within Uganda and the other fees for this financial year will be Shs 17.5 trillion.
The balance (the difference) is handled by borrowing from outside the country, Shs 8.3 trillion, as well as borrowing from within the country, Shs 7 trillion. We, then, also get grants from outside to the tune of Shs 280bn i.e Shs 0.28 trillions.
Why do we have to borrow or beg from outside or even borrow from within? We do so because many people who are supposed to pay tax do not pay the tax. How do we know this?
We know this by using the standard measurement used all over the world. This is the GDP: tax ratio. This means the amount of taxes paid compared to the size of the GDP, the size of the economy.
In 1991, it was only 4% of GDP. When we formed the [Uganda Revenue Authority] URA, it rose to 12% and it has stagnated there for a long time. Last financial year it rose to 14.2%. In other countries in Europe, the GDP: tax ratio is 30% or more. The average GDP: tax ratio in Africa is 18% .
Why is the GDP: tax ratio in Uganda so low? The following are the reasons:
(a) telephone companies have been under-declaring calls until recently when we acquired machines to see the telephone calls ourselves. Big shame to the culprits;
(b) Many of the people who should be paying taxes of incomes from rent do not pay or underpay;
(c) Many citizens are still in subsistence agriculture (okukolera olubuto kyokka, Itiyo pi ikeni ) and informal sector (juakali) and I always oppose taxes on those sectors (gonja roasters, mchomo sellers, mechanics, carpenters etc); in any case, it is difficult to know how much they earn;
(d) Absence of scanners on the borders allows false declarations of goods in containers. The URA now has 4 scanners only. I have directed them to buy enough scanners to cover all entry points by land, water and air; and
(e) Slowness in introducing electronic stamps to the goods imported from outside at the factory level.
We, therefore, end up getting revenue from consumer taxes on mainly luxuries, income tax, profit tax and import tax on consumables minus the production inputs only. That is why we end up with the low GDP: tax ratio of only 14.2% and have to borrow or beg, yet our economy is growing.
Coming specifically to the social media and mobile money taxes, Ugandans need to ask the following questions:
1. When you post or send communication on social media platforms like Facebook or whatever, is it for free or do you pay?
2. Do you send mobile money for free or do you pay?
3. If you pay, whom do you pay?
4. Do you pay in dollars or in local shillings?
5. If you pay in local shillings, do the ones you pay, most of whom are foreign companies, take money out of Uganda in local shillings or in dollars?
6. If it is dollars, who earned those dollars?
Let us answer the last question first. Those dollars are earned by us who produce coffee, tea, the milk products, by our gold, by our tourism, by our processed fish , by our manufactured goods (e.g cement, textiles, soap, mattresses, cooking oil, etc).
Therefore, some of us, myself included, either earn the dollars or save the dollars by producing products instead of importing them, but some of our countrymen donate those dollars back to the foreigners by chatting endlessly on the social media. Is this correct or fair? Is it good for our country?
Mobile money transfer is, of course, different from the social media chatting. Social media chatting is a luxury by those who are enjoying themselves or those who are malicious.
Mobile money transfer, on the other hand, is a useful service. Since the informal sector (juakali, mchomo selling etc) is never taxed and I am always against those direct taxes on those sectors, is it too much for users of the mobile money senders and receivers to also make a modest contribution to the development of their country?
The 1% was a miscommunication. The actual figure was 0.5%, half of one percent. That is what we should debate, on the mobile money.
As to social media tax, all the moral reasons are in favour of that tax. 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.
The same with those who engage in games betting. They bet in local shillings. Since, however, our economy is an open one, the foreign owners of betting machines rush to the forex bureaus, buy dollars, the ones I earned, so as to externalize them. This is what affects our shilling.
The importers of foreign luxury goods; wines, whiskies, artificial hair, furniture, textiles, shoes etc, goods that can be made here, also squander our dollars. Fortunately, on account of our campaigns, the import bill has decreased from $ 7 billion to $5 billion. That is not enough, however.
There are no taxes on agricultural products, no taxes on machinery for factories or agricultural machinery, no taxes on raw materials, no taxes on scholastic materials, no taxes on medicine, no tax on exports, no graduated tax etc. Most of the inputs in wealth and job creation are not taxed because we want people to engage in production. The essentials are never taxed.
This is to clarify that there is no tax on mere depositing money on a mobile phone account. That confusion should be clarified. The half percent tax, not one percent, is only on the sender and the receiver of money through mobile money. Discuss this.
I congratulate our science team for demonstrating that we now have the eyes to see all the goings on in the telecommunication and financial services. No more games.
This capacity will be extended to deal with the criminal pigs that have made it a hobby to kill Ugandans. They will pay. I am, however, interested in a rational and honest dialogue, especially on the half percent tax on mobile money sending and receiving.
Yoweri Kaguta Museveni.
Well put. It is us, Ugandans who have failed to get rid of this bustard! 32 years and still counting?
Definitely M7 has succeeded in deceiving us because we have let him continue to lie us!
Museveni has failed. Ugandans have been law abiding all these 35 years but just wait and you will see.
Under a visionary leader this country has all the necessary possibility of becoming an agro industrialized nation.
How many tractors could buy the money wasted on uprooting age limit ,maintaining crime perpetuators and funding the national robbbing movement.
Tractors which could boost agriculture and permit these small farmer to shift from subsistence to commercial agriculture.
A responsible gorvnment was supposed to supply them with income generating crops and training.
The above speech is sign of incapability from the dear president. ls it not time to throw the towel and let in fresh minds to clean the mess you have imposed on this population.
There is no one who has been convicted of the crimes that have been happening recently. Even if these criminal are tried and convicted. They are not pigs. They are suspects and if convicted, they become convicts.
M7 has never followed the rule of law. He used the gun to capture power and has maintained it using the gun. We have not yet known the motive of the criminals who are killing Ugandans, however, M7 already knows.
He said that if you don't agree with someone or if you lost in parliament don't resort to violence and kill the people. What did M7 do when he lost the 1982 elections?
He pick up the gun and used violence as the means to capture power. Since he knows why Abriga was killed (because he supported okugyikwata ko), does that mean that M7 is a pig? I'm simply asking a question. Why didn't you post my comment?
Your love for money will lead to your downfall. Never mess with the corporate world order.
I am an American we pay tax as well. And at first, I was in agreement with your president> But when he said about gossiping right then and there I knew that was a spirit of control.
BE STRONG AND FIGHT FOR YOUR RIGHTS. Let no one take your rights. I fell in love with Kampala.
You guys fight like never before. You guys are going to come out on TOP. I believe in you. Like I said I have family there in Kampala
You said peace everywhere in Uganda and charting is part of it. am i right.
Excessive power is always misleading.Emotional taxation .That was it. God bless Uganda please.