This week protests burnt the wires as everybody who was
anybody, complained about the new taxes on social media and mobile money
transactions.
It was interesting to me that the loudest noise was made
about the sh200 daily tax on social media and not the one percent tax charged every
time you touched your screen to do a mobile money transaction.
Strange, because there are about one million internet users
in Uganda and about ten million mobile money accounts.
Clearly the mobile money users were feeling the pain. It was
reported that in the first few days of the tax transactions collapsed to a
fraction of their previous levels.
There was no evidence that social media activity had gone
the same way, but then again the protesters had switched to the Virtual Private
Networks (VPN) which bypassed the mobile network operators.
"How is it that such a relatively small number can make so much noise? Or were they actually? Isn’t it that I am also on social media, that I felt the incessant fury of the chattering masses? The vast majority of mobile users were probably oblivious to this noise...
It’s not worth my time to protest against the social media
tax. I am more interested in the mobile money tax(es).
If we step back a bit from the forest.
According to the 2018/19 budget the government has earmarked
sh32trillion to be spent on providing security, education, health,
infrastructure and other public goods. This comes down to about sh800,000 for
every one of the 40 million Ugandans.
I hope that number provided some pause for thought.
That sh800,000 is for the whole year. Chances are that
anyone reading this column by virtue of the fact that they can read English,
shell out sh2000 for this paper or know someone who does, would not begin to
even contemplate getting by on sh800,000 a year.
Food, rent, transport, school fees, power, water etc etc
would consume that sum before the three months were done. And I am obviously
being very conservative.
And we know government is struggling to provide.
Look at the state of Universal Primary Education (UPE), our
public health system, our security and even our roads. I will be the first one
to point to corruption as a key driver of these inefficiencies but even I
wonder how much government can do, even if they spent everything as was
planned. Not very much I fear.
Across the border in Kenya the government will spend the
equivalent of sh1.6m on each Kenyan or double our own government’s outlay.
Anyone who knows people in Kenya, they make the same complaint about inadequate
service delivery. From afar their corruption seems makes our own practitioners
seem like they are in kindergarten, but you have to wonder about the amounts,
even there.
The equivalent for little Botswana in the south is 3.2m.
"The figures suggest to me as a Ugandan that the government is spending way too little on me. It is even shocking when you see how much the government plans to spend on health, sh57,000, Education, sh78,000 and security sh53,000. All these figures are for the whole of the fiscal year 2018/19...
And how much does government plan to collect from every
Uganda this financial year, on average? Sh400,000!!!
Now if you are Pay As You Earn (PAYE) payer like I, you must
have done a double take at that figure. If I speak for myself, if my annual
PAYE bill was sh400,000 you can charge me sh10,000 a day in social media tax
and I would not care.
The point is that a small group of us – about a million
workers out of a workforce of 11 million, are shouldering the burden of the
government budget. No wonder nothing works and us the same workers who fork out
the money to provide health, education and security still have to pay for the
same services privately.
I and the other tax payers are the real victims of Uganda’s
poor economy.
So some of us vote with our feet and leave this god forsaken
land.
If we were to land in the Netherlands, the government would
spend the princely sum of sh11m per person and we would get free education,
health, credible security and all the other good things that come with a
functioning government.
However, my share of that government expenditure would be
sh10.2 million in taxes or 92 percent of the Netherlands taxes come from
domestic revenues. They have no donor countries to help them. They are the
donors.
The point is clear if we want world class services at home like we see when we land at Schipol or Heathrow or John F Kennedy airports we have to pay up....
Which brings me to the mobile money tax.
The mobile money tax as designed and at the rate being asked
is a disincentive to the whole payment ecosystem that has grown around it and
by extension it’s doubtful whether the government shall get the taxes it
planned for.
The logic is sound. As the finance ministry pointed out this
week last year sh54trillion coursed through the mobile money networks but 70
percent of that money, the income which generated it was not registered at the
URA’s data base. We know we are a largely informal economy so how better than
to catch the untaxed monies than using mobile money?
The President on Wednesday evening clarified that the tax
was not to be leveled on deposits to the system, effectively a digitisation of
money, and that the rate should come down to 0.5 percent, this is great but
still punitive when you levy it on two sides of the same transaction.
With the above being said government needs to walk the tight
rope between extracting maximum tax and throttling the goose that lays the
golden eggs.
"A comprehensive review of the mobile money tax is long overdue – a week into its implementation...
