By Dennis Katungi
Quite a number of headlines both in print & other media have highlighted the angst that met the OTT (over-the-top) taxes. MTN, Airtel & Africell are already deducting the taxes; which add up to Shs6000 monthly.
Mobile money taxes appear to have angered payers the most and the President obliged with a lengthy; well-reasoned explanation. Will we be taxed when we use mobile money – paying children’s school fees; Yaka (electricity) bills; or sending money to pay for parent’s medical bills in the village? This appears to be the element that irks people the most. Will the Ministry of Finance quickly explain the discrepancy between the 1% and the 0.05% the President mentioned in his missive? This tells us that government needs to communicate better.
Naturally, taxes are never a welcome thing not just in Uganda but the world over. As a student; I witnessed the largest protest in central London on Saturday 31stMarch 1990; shortly before the poll tax came into force in England & Wales. The Thatcher government had long promised to replace domestic rates; which were unpopular especially among the Conservative voters. It was levied on houses rather than people. The replacement was a flat-rate per capita Community Charge – a head tax that saw every adult pay a fixed rate amount set by their local authority.
The poll tax proved extremely unpopular and contributed to the downfall of Margaret Thatcher who resigned as Prime Minister on 28th November 1990. John Major, who succeeded her, announced that the tax would be abolished; although it never was. The community charge metamorphosed into the current council tax in England, Scotland & Wales.
What is our situation in Uganda? The President explained it all in his social media missive. We borrow, or beg from outside, though to a lesser extent than in the past. We also borrow from within. Many, who are supposed to pay taxes on rental and property income, do not. Telephone companies under-declare calls and the government has limited capacity to monitor them.
A large chunk of our citizenry still live in subsistence agriculture or operate in the informal sector. A limited number of scanners & other gadgetry available for tax enforcement are exploited by tax dodgers. The President explained that the bulk of revenues are collected from consumer taxes, income tax, profit tax and import tax. It is the reason we end up with the low GDP: Tax ratio of 14.2%.
Is government then not entitled to think outside the box? Why was it elected in the first place? Damned if it does, damned if it doesn’t. It is a given that the process and nitty-gritty of any new tax should be well thought out and explained, but at the end of the day, if government has to collect tax, it has to collect tax. It’s been like that since biblical days. There may never be a time when citizens say: hurray, bring the taxes on and we pay gladly.
The moral reasons as explained by the President, support social media tax. Users have no right to squander the hard currency earned from our coffee, tourism, fish and tea exports by donating money to telecoms for chat, VPN access, free WhatsApp calls etc. A simple modest tax of Shs200 a day appears a reasonable contribution. In his usual abrasive style, Andrew Mwenda twitted: ‘Social Media & Mobile Money are easy to avoid; just don’t use the services; avoid WhatsApp; use sms, drive to Katakwi to give your mum 50k, you will discover that it is more expensive than paying Shs200 & 1% (0.5%)’.
The President highlighted the key areas that largely remain untaxed in order to boost the economy; agricultural products, machinery for factories, raw-materials, medicine, exports, most inputs in wealth and job creation as well as essentials.
Capacity built by our own scientists and innovators now give government some leverage - dealing with telecoms and corporate financial services hemorrhage in dollars. This capacity, the President explained, will be extended to deal with the criminality; recently appearing to spill out of control. He was open to dialogue on these issues; indicating that recent decisions are not conclusive; a rational and honest debate is welcome. Try to seek citizenship in other countries & see, the first question always is: have you been paying your taxes? In the UK, for example, Her Majesty’s Revenue & Customs will be asked to check up on you. If, as an adult you have never paid taxes, you are unlikely to gain British citizenship. It is a patriotic duty to pay taxes.
Mr Dennis Katungi is the Communications & Media Relations Director, Uganda Media Centre.