Civil Society Organisations (CSOs) have said the proposed 1 percent tax on each mobile money transaction is a setback to financial inclusion and have accused government of being insensitive to the needs of poor Ugandans.
Under their umbrella grouping, Civil Society Budgeting Advocacy Group (CSBAG), the CSOs said mobile money is the most commonly used cash transaction method in the country and that making it expensive will make the poor and vulnerable shun it.
“Mobile money started around 2009 and it has now over 23 million subscribers who also have mobile money accounts. Our banks have been here for decades but they only have 5 million accounts. We are very sure these taxes are intended to discourage mobile money industry,” said David Walakira, an activist, during a press conference in Kampala on Monday.
The new tax on mobile money transactions is contained in the tax proposals contained in the Excise Duty (Amendment) Act 2018, which if passed by Parliament, will mean that with effect from July 1, 2018, government will take 1 per cent of the value of your money every time you use your mobile money account.
However, CSBAG Executive Director Julius Bakunda also said the new taxe will subsequently render over 150,000 mobile agents across the country idle.
“The effective tax on deposits, transfers and withdrawal could reduce the already low payments being received by the end users. If the public resorts to hard cash transaction, our 150,000 sisters and brothers employed as agents are likely to close business,” he added.
Mr Bakunda 48 of districts in Uganda lack access to any bank and ATM respectively and that mobile money is important to economic growth.
“We acknowledge the contribution of mobile money to financial inclusion as it enables more efficient payments for goods and services, reduces the informal economy, creates employment and protects vulnerable segments of society from financial shocks,” he said.