The new taxes came into effect on July 1 when telecoms started a one per cent tax levy on each mobile money transaction including on every deposit, every amount sent, received or paid.
The multiple deductions drew outrage from mobile money users who accused government of double taxation drawing the attention of the president. In his communication, Museveni explained that there was a miscommunication, saying the mobile money tax should be 0.5 per cent and not one per cent.
He also explained that the tax is only applicable on those sending and receiving money through mobile money and not those depositing money on their mobile money account. However, the president's directive can only come into effect following the due process of parliament, MPs have said. It is not clear how the president assented to the law, which according to him had a miscommunication.
Parliament's Finance Committee chairperson Henry Musasizi says since the proposal to revise the mobile money tax was made by the president, government ought to table an amendment bill before the House for consideration. He explains that in this case, it is the ministry of Finance which ought to draft the bill and send it to cabinet for endorsement.
Once approved, cabinet forwards the bill to the first Parliamentary Council, which is mandated with the responsibility of drafting it. After this process, the bill is returned to cabinet for perusal and dispatched for printing and publication in the Gazette for the public to read.
The mover of the bill then tables it in parliament for the first reading, before it's committed to the Finance Committee for scrutiny. The Committee scrutinises the bill and returns it to parliament for the second reading within 45 days. The bill is then read for the second time and debated by members in parliament, where government is expected to justify it.
This is then followed by the third reading. Parliament can make changes to particulars of the bill before approving it. Musasizi says the president's proposal can only come into effect after August.
"Then [the amendment] you give it 45 days, it says within 45 days. The Committee can consider the bill and report back to the House, so you’re looking at a period to be very sure you’re looking at a period between August and September for the president’s proposal to pass through parliament." said Musasizi.
Musasizi also says that although the focus is on the one per cent mobile money levy, the initial charges by telecom companies are also very high and should be debated. Ministry of Finance spokesperson Jim Mugunga says they are working with the institutions involved to effect the president's proposal.
Hamson Denis Obua, the Ajuri County MP, says when the amendment comes back to parliament, it should be made to meet the public expectation. He says it is very clearly that the first proposal can't work. Telecoms are still enforcing the 1 per cent mobile money levy despite the fact that some mobile money users think it has been revised to 0.5 per cent.
Janet Hamala, a mobile money vendor in Kampala, says the one per cent tax levy has made mobile money costly to their customers.
Another vendor at Nakasero market said that the mobile money tax has pushed away many of their clients away.