Take lessons from mobile money tax saga

The confusion surrounding the mobile money tax is, seemingly, over. Telecoms will no longer hide behind legislative mix-up to charge taxpayers more than their representatives have agreed they should pay.

But as all this settles, two things are clear: Taxpayers have lost billions of shillings and government is unapologetic for a glaring mistake. All public officials have had to tell Ugandans is “move on”. A refund would have sufficed but given the state of the economy, and we are alive to the same, we think a sorry and an undertaking that such confusion, in the future, would be avoided can assure Ugandans that their government at least cares.

For clarity, by the time you read this, telecoms should already be taxing only 0.5 per cent tax on mobile money withdraws and should not rely any further on the excuses they have put forward ever since controversy on the tax started. State minister of Finance in charge of Planning, David Bahati told the House plenary on Thursday that the Excise Duty (Amendment) Act, 2018, to enforce the 0.5 per cent tax law will be gazetted on Friday, November 16. President Museveni already assented to the Bill into law. That now is the law.

As we look forward we must, as a country, be cognisant of the losses we have made since this tax came into force. For starters, government has lost would-be revenue due to the apathy created by the tax. It is many times more than they projected to collect in the tax. Many people stayed away from mobile money as much as they could and this has dipped the transactions by more than a billion shillings.
It is not clear if all those who stayed away have been using banks either. We cannot start to comprehend the sum effect on our financial inclusion goals.

By August, a month after the tax had been introduced, for example, mobile money transactions had declined by Shs672b in the first two weeks of enforcing the tax, Bank of Uganda and telecoms reported.
A much clearer figure will come in the near future as the budgeting process for 2019/2020 Financial Year kicks off. The telecoms also lost. Within the same period, for example, telecom giant MTN Uganda, reported a 30 per cent decline in revenue since the tax took effect.

The above examples are just a tip of the iceberg. Could we have done any better? Absolutely yes. We hope, going forward, government thinks through its tax plan.
A good tax system should meet five basic conditions including fairness, adequacy, simplicity, transparency and administrative ease. We are of a view that this tax misunderstood by both the Executive and Parliament, according to official records, failed on almost all the above aspects that would have made it fair.

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