The government has heeded to the public pressure and made changes in the mobile money tax excusing deposits from the 1% surcharge.
State Minister for Planning, David Bahati made the revelation on Tuesday night after petition led by lawyer Silver Kayondo took to the Constitutional Court challenging the legality of the taxes that took effect on Sunday July 1.
“Cabinet has resolved to scrap the 1% tax on mobile money deposits because the it was put in error,” the minister said.
Bahati however noted that the tax was to remain on withdrawals, payments using mobile money and social media platforms where the government expects to collect over Shs100billion this financial year.
The mobile money tax caused an immediate uproar with civil society, schools and the business community all ganging up on government to remove saying it would widen the poverty gap and hurt financial inclusion.
Mobile money users in Uganda rose from 18.8 million in 2016 to over 22 million in 2018 transacting over shs54trillion annually according to Bank of Uganda statistics.
Government ignored warning of telecoms consultant
Matooke Republic has also learnt that the government ignored warnings from the telecoms’ consultant about the dangers mobile money tax would cause to the economy.
Senior Economist Prof Augustus Nuwagaba was the lead consultant for both MTN and Airtel Uganda said that he warned the president of the repercussions of the tax but his plea fell on deaf ears.
“We had discussions until the very top but they did not hear me out,” the renowned academic said.
Nuwagaba further revealed that he persuaded government to tax telecom Escrow accounts to Bank of Uganda and only mobile money withdrawals but government was adamant.
“The mobile money tax will only give government Shs115bn yet we gave them an avenue where they could get Shs95bn more and they refused. These people just don’t understand economics,” he added.
People Power: Youth unsatisfied with the changes, want whole tax repealed
Despite the government retraction, Ugandans are unsatisfied with the changes and want the whole law repealed.
Raymond Mujuni, a journalist and one of the petitioners in the Constitutional Court told Matooke Republic that the government retraction is a realisation by government that the people are against the tax and that if pushed further, the tax will be repealed.
“What we want is not a retraction. We want the tax to go entirely and not just the mobile money tax but the Social Media tax too. We are waiting on the court to set a date to hear our case and if we are not satisfied, we shall seek other legal means,” he added.
There are however other Ugandans who are not prepared to wait that long. They are raising the required signatures (one third of Parliament) to make the Speaker of Parliament, Rt. Hon Rebecca Kadaga reconvene Parliament and have the taxes repealed.
Kyadondo MP Robert Kyagulanyi known popularly as Bobi Wine told the media that mobile money and social media taxes are illegal, illegitimate and unfair, giving government until 12pm tomorrow to have repeal the taxes.
“We are going to mobilise Ugandans from all over the country and they demand for what is rightfully theirs and I promise you that we will win. An unjust law is no law at all. The youths are the majority in this country and they deserve to be treated with respect,” he said.
In company of musicians Dr Hilderman, A Pass, Spice Diana, comedian Salvador and others, the artists said they would use their popularity to get their fans to abandon mobile money, stop buying data bundles until the telecoms have no revenues to collect forcing government to backtrack the taxes.