At the beginning of April, Uganda’s president, Yoweri Museveni stated that he would tax social media usage in the country, apparently, since they are used for “lugambo” (gossip). In what seems like a terribly scripted sitcom, the proposal was taken to parliament and last evening, the Excise Duty (Amendment) Bill, 2018 was passed bringing into effect, social media usage taxation as well as mobile money taxation.
Uganda does not pride itself as a country with high internet penetration, with the number standing at 31% penetration at the end of 2017. Such a move would be seen as a bigger hurdle to grow this number, but the government does not see it this way. They argue that the new taxes will generate more revenue and broaden the tax base – apparently, the government does not have “a money minting machine.”
Optional Social Media Tax
Ugandans will from July 1st, be required to pay UGX.200, daily, to access social media services such as WhatsApp, Facebook, Instagram and Snapchat. This move had been highly criticized as ‘diversionary, deceptive, injurious to individual freedoms and burdensome’ by human rights defenders and opposition leaders.
Some members of parliament also said that the social media tax would stifle the flow of information but this did not seem to move the majority. Hon. Bahati David, Uganda Minister of Finance for Planning, clarified that “the tax is not on data but on the service… If you don’t access social media for a day, you don’t pay.” The same sentiments were echoed by Member of Parliament and Minister for Health, Hon James Kakooza who said, “if you want you pay, if you do not want, you don’t use it.” Making it clear that those who are against the social media tax, will not have access to these services.
1% Mobile Money Tax
The other whip to the butt was delivered when the parliament approved 1% taxation on the value of all mobile money transactions, i.e., withdrawals, payments and transfers. This comes just after the Uganda Communications Commission placed a ban on all airtime scratch cards in Uganda as from June 30, 2018, asking consumers to purchase airtime via electronic means which highly rely on mobile money.
Despite the numerous calls from the opposition that taxing mobile money transactions would have a negative effect on the poor, the government insisted that taxes have to be paid if government services have to be delivered. With a parting shot from Hon. Bahati David, “The poor want free healthcare, free education, free roads, etc. Their appetite for good services should be matched with the capacity to pay taxes.”