Despite protests within and outside Uganda, the over the top (OTT) Shs 200 daily tax on use of social media will stay because the country needs resources to broaden internet coverage, government has said.
When on July 1, government started imposing Shs 200/daily tax for social media users and 1% levy on all mobile money transactions including on sending, receiving, paying and withdrawals, some activists sued government while others took to the streets to protest against the new taxes.
Addressing the media today at the Uganda Media Centre, minister of State for Planning David Bahati said because the current government “is a government that listens”, it has listened and is to make adjustments on the mobile money tax regime but not on social media tax.
He said cabinet, yesterday Monday, resolved that the social media tax stays while mobile money tax has been reduced from 1% to 0.5% for withdrawals. The minister said cabinet has approved the Excise Duty (Amendment) Bill, 2018 that will be laid before the House on Thursday, July 19.
Minister of ICT and National Guidance Frank Tumwebaze said the taxation on withdrawals is for those craving for paper cash and is meant to encourage cashless transactions. This, Tumwebaze said will develop the country’s technology prospects and financial inclusion.
When it was put to him by journalists that most of the recipients of mobile money are the low-income earners, hence taxing them will not promote financial inclusion, Tumwebaze said those sending in money should henceforth factor in withdrawal charges.
“Logically, there's no money [tax] on sending because not all the money you send is on payout. If I am sending it to you, I will factor in withdrawal charges. When you look at banks they do not charge you for depositing, but withdrawals…if I use my phone to pay utility bills and school fees I am not charged money. So I am relieved of that burden” he said.
On internet users opting for virtual private network applications so as to avoid paying the social media tax, Tumwebaze said Ugandans have got to wear their patriotic lens and look at this critically - to continue giving money to foreign developers of VPN or pay the tax to enable government develop their country.
Earlier this month government said it would block VPN applications, Tumwebaze said while UCC may not be successful at this, Ugandans should simply pay the tax so as to develop their country. According to Uganda Communications Commission (UCC) as at March 2017, there were at least 3,023,114 internet users in the country.