Last week in leaked correspondence between the finance ministry and the central bank, the former proposed imposing a duty on cash withdrawals from banks.
The revelation triggered off a firestorm online from the chattering masses, who complained that this constituted double taxation of their incomes and threatened to empty their bank accounts in protest, talk about cutting off the nose to spite the face.
Relatedly, or maybe not, The European Union (EU) parliament passed some recommendations on Uganda in relation to the just concluded elections, the EU’s continued engagement with Uganda and human rights abuses.
Depending on who you are the EU’s recommendations were met with glee or outright disdain.
But back to the bank withdrawal fees.
In 2018 when the government announced the 0.5 percent levy on mobile money withdrawals there was a barely a squeak from the banking sector.
By that point the mobile money platforms had done in about eight years what the banks had failed to do in a hundred years, which was allow access to credit to the lowest of the low in society.
By the time the withdrawal tax was slapped on mobile money,
mobile money accounts stood at about five million but have since jumped to about 30 million today...The total number of bank accounts today is about four million.
On mobile money platforms the masses found a way to access financial services, even if in the beginning it was just to transfer money. Today people save, borrow, transact and insure themselves off their phones. And one can expect that the pervasiveness in the community will only increase.
Going by the success they have had with taxing mobile money withdrawals it was always a matter of time before they swung around to banks.
Classic divide and rule tactics. Especially since with the introduction of the mobile money tax in 2018, while transactions have been growing annually, the average value of the transactions is decidedly lower than when the tax was introduced. Where did the high value transactions go? Maybe to the banks?
The banking industry has complained that levying the tax would affect their business and lead to a fall in deposits.
Unfortunately the test case of mobile money does not suggest this. The value of mobile money transactions has since grown to sh80trillion last year --- twice the national budget or 70 percent of GDP. As if that is not enough mobile money accounts have jumped to 30.5 million.
So what is good for the goose should be good for the gander.
That being said the banking industry has proposed in reaction a scraping of the tax on withdrawl amounts and instead maintaining the 15 percent excise duty on the transactions charges, on both bank and mobile money withdrawals.
This is unlikely to raise as much revenue as government would have with the initial proposal in the near term. And it is hard to see how government would forgo the billions it has been racking in from mobile money.
It is only fair that whatever applies to banks should apply to mobile money transactions.
Some people would argue though that with mobile money’s penetration, providing access to financial services to a wider population, they should be given preferential treatment. That maybe a discussion for another day.
Back to the EU recommendations, they can seat in Brussels and send edicts to far off Africa, like Zeus hurling lightening bolts from atop Olympus because they donate and lend us a lot of money annually. And why not? They are within their rights to insist that governments that they help behave, display acceptable behaviour – after all they have to sell and seek permission for these donations from their tax payers.
It therefore follows that
if we are tired of their lectures we should pull up our socks and pay more taxes...
It is common sense isn’t it? Unfortunately – for us, its easier to convince a European technocrat to release a few million Euros than it is to widen our own tax base!
