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PARLIAMENT

What your MP said during Social media, Mobile Money tax debate

 

Social Media and Mobile Money tax bill was passed by the House, following arguments of different MPs. (FILE PHOTO)

KAMPALA- The Speaker of Parliament Rebecca Kadaga on the afternoon of Monday 9th July 2018, received two petitions on the recently implemented Excise Duty (Amendment) Act in her Boardroom.

Ms Kadaga promised both petitioners, Makerere University Guild, who presented a petition on the Over the Top Transaction or social media tax, and Mobile money vendors led by Boaz Byamukama on the mobile money tax, that the House would sit next week to review the taxes.

On 01 July 2018, government introduced a tax on all social media platforms and the transfer of funds through mobile money services, sparking public outrage and a section of civil society organizations filed cases challenging the taxes.

Following the backlash from the public on the imposed taxes, Parliament published a verbatim of what MPs said during the debate. PML Daily brings you what MPs said.

Hon. Annet Nyakecho (Independent, Tororo North County): Thank you, Mr Chairperson. I would like to seek clarification from the minister. We know that OTT services are mostly consumed by the young people. They are the ones you find using WhatsApp and Facebook. These are graduates who do not have a lot of money. Before you access these services, you have to load airtime, which is again translated into internet bundles of whatever amount you want. Already, I assume you will have paid some tax. So, isn’t this double taxation?

Hon Robert Kyagulanyi (Kyadondo East County): Thank you very much, honourable minister. I appreciate the fact that you mentioned that taxation is a duty and not a punishment. Allow me to inform you that over taxation is not only punishment but oppression.

Where I come from, mobile money is not just a business but a livelihood. Due to insecurity, people depend mainly on mobile money. I will give an example of a fairly decent Ugandan who earns Shs 1 million and they spend all that money through mobile money. If the taxation was levied once, we would not argue so much about it but since it is mobile money, it is charged on every transaction, received or sent. That means if that person receives that money, they are being taxed on their salary; when they pay for their children’s fees, they get taxed; and they continue to be taxed at every level, which I believe is oppression. At the end of the day, honourable minister, you realise that life is actually being taxed. Somebody is being taxed multiple times.

I am not going to raise an argument on the cooking oil or the motorcycles but I would like to suggest that we indeed drop this taxation idea. Thank you very much, Mr Speaker.

Hon Aogon Silas (Independent.Kumi Municipality). Mr Chairperson, without the bundles that we buy, we cannot access WhatsApp. I know that very well. You have got to have mobile money and then you can use it to buy Megabytes (MBs) before you can access WhatsApp. How do you tax what has already been taxed? That is the issue. If you doubt what we are saying, let us then do some practicals here and then you will see.

Hon David Bahati (State Minister of Finance for Planning).Thank you very much, Mr Chairperson. First, to allay the fears of hon. Anywarach, it is not true that we are imposing tax on data, which is a main source of information. We are not taxing data. We are not taxing the internet. We are taxing OTTs.

If you are using WhatsApp or Viber, the Shs 200 which we are proposing here will actually translate to Shs 70,000 per year. That is what we are talking about. It is Shs 70,000 the entire year –(Interjections)– You are making a contribution of Shs 70,000 for the whole year; can you imagine! It is as simple as that.

We are not taxing data and internet. We are not taxing educational materials; you are aware of that. Therefore, Mr Chairperson, in simple terms, this is what we are trying to do. You are providing Shs 200 per day for access and it is translated into Shs 70,000 per year. It is very little but it is a contribution to the development of your country.

Hon Oguzu Lee Denis (FDC, Maracha County): Mr Chairperson, I wanted to inform the Member that Uganda signed to a principle known as net neutrality. There is an understanding that Over the Top Services (OTTs) must not be treated differently by any telecom communications company. Uganda is a signatory to that –(Interjections)– We can, at an opportune time. However, that should be investigated. Uganda has signed to that and it requires that no OTT must be treated differently.

Hon Bright Rwamirama (NRM, Isingiro County North): Thank you, honourable colleague, for giving way. Mr Chairperson, I would like to inform you that in Africa, in terms of the cost of mobile telephone calls and data, Uganda is still the lowest. I was in Burundi where if you make a call, it costs three times as much as here. I was in Mozambique where a call costs four times as much as in Uganda –(Interjection)– I am not known for telling lies; it can be verified.

Mr Chairperson, this is an area where we can generate money to cover some of these deficits. Therefore, people should be encouraged to approve this tax because it is necessary.

Hon Mwesigye Fred: (NRM, Kiruhura Nyabushozi County)This was information. Mr Chairperson, let us be realistic and save this country and our constituencies because the deficit is increasing as a result of our demands. We want electricity, schools, and technical institutions in every sub-county and we want to increase salaries. Even you want a salary increment. How do you think you will –(Interruption)

Hon Amos Lugolobi: (NRM, Kayunga, Ntenjeru North) Mr Chairman, right now we are dealing with a national budget and I have noted the fiscal deficit. The target in the Charter for Fiscal Responsibility, which we have to comply with, is 3 per cent. As we speak, instead of this fiscal deficit reducing from 5 per cent downwards, it is now increasing to 8 per cent. The deficit is widening, which is a very big threat to our economy.

Friends, if you really love your economy and you want your economy to survive, you have to generate more tax revenue. We cannot sustain this economy by borrowing, and remember that most of the resources today are domestically borrowed, which is very expensive for this country. Let us save this country by asking our people to pay taxes. That is the only way. We all agree that the way we do things has migrated from the way we used to do them; it is now more than at the convenience –

Hon Pentagon Kamusiime (NRM, Butemba County, Kyankwanzi): Thank you very much, Mr Speaker. It is common knowledge that we need tax so that we can implement Government programmes or offer services. However, as a cattle keeper, I know which cow I should milk?

Hon Anywarach Carter Joshua:(Independence Nebbi, Padyere County) I thank you for the information. Finally, honourable minister, I have good news for you. Yesterday, I proposed on the Floor of this Parliament that we should exempt broadcasting equipment and you said, “No; we need to think about it and maybe consider it next financial year”.

Mr Chairperson, this is also something we need to think about because he is bringing a new component in the taxation regime. However, it is also going to have an effect on economic development. Many Ugandans do businesses online using WhatsApp and other platforms. Therefore, my understanding is that if we can – Uganda is not ending today or even next year – we can still think about it because tax laws are amendable every year. I beg to submit.

Hon Muwanga Kivumbi: Mr Speaker, there is also the problem you have raised about transactions across networks.

My other bone of contention is that we already have a budget proposal where expected revenue from this tax is incorporated and there is a minister at hand. Therefore, for us to come here and simply say “remove”, we would have to look at the other side and consider how difficult it would be to raise the money.

Mr Speaker, I have had an opportunity to critically look at the budget before this Parliament. I think it is a budget that is going to heavily depend on borrowed money. However, care must be taken so that the poorest of the poor are not hit hardest by the taxes we intend to impose.

Therefore, my humble proposal is that the minister, who has everything at hand, goes back and solves the following things: The first is the money that is imposed during transactions. Can we innovate around that? The argument of the minister is that if we do so, companies will automatically transfer that burden by raising the fees. Without regulations, which Members have talked about, companies would be at liberty to do so. This is because we have no regulatory mechanism on how to handle it.

My humble appeal to the minister is that he goes back and solves that problem so that we can get something fairer, reflecting a figure that will not be injurious to the overall budget revenue source.

Hon Jimmy Akena Obote: In the debate, the arithmetic was totally wrong. When we brought up the issue of the elderly receiving Shs 26,000, I think one person said that the taxes would be Shs 260, and that is only for receiving. If they withdraw, there is another tax of one per cent. If they send it, there is another tax. Therefore, the minimum is going to be Shs 540 to receive Shs 26,000.

Honourable minister, you say that it is people outside of the economy, but it is the Government’s choice to go for indirect taxes. Anybody who spends even one shilling in Uganda is being taxed, whether you buy salt or pay a taxi fare. Everything is being taxed indirectly. It is by choice that graduated taxes were removed and other taxes, which have direct accountability.

However, on the issue of mobile money, I do not think you are being honest with us because the minimum is going to be double taxation, for receiving and withdrawing. The object of the Bill says to receive and to withdraw; that would take two per cent immediately.

Hon Winfred Kiiza: Thank you, Mr Speaker. I thought the House would not be misled after I had said that the Uganda Bureau of Standards, after the census, said that only five million Ugandans are exposed to the banking sector. Therefore, there is no question of choice here but the choice left for the poor people in the villages is mobile money.

As I wind up (Interjection). I know your information is important, honourable colleague, but the Speaker is telling me to wind up. We are also talking about levying a tax on cooking oil. The majority of the people who are in the cooking oil business are the women. I do not know where this country wants to put the woman of Uganda. Right now, women at the border points of Rubiriha-Mpondwe, Busia and other border points are in one way or the other trading in oil.

However, even before this tax is introduced, I can tell you that my own women have been subjected to some form of tax on the crude oil coming from Congo. I do not know whether you introduced the tax before the law was made but after getting the money from them, you want to bring the law. I can tell you how these women, from time to time, are crying and spending reasonable time in jail under the Uganda Revenue authority (URA). My issue is, would we need (Interruption)

Hon Odonga Otto: (MP, Aruu County – Pader)Thank you, hon. Mwesigye. Research, which has been done by a university student, shows that people use WhatsApp only during weekdays and in many cases, during working hours. You walk to every office, one after another, and the staff are even stealing office time to enjoy private chats on WhatsApp.

I did economics at the university, mind you. (Laughter) WhatsApp, Viber, Facebook are ostentatious commodities. They are almost like perfume. The ordinary man in the village can do without it. (Applause) We are looking for a certain category of people who do not mind about the Shs 200. Personally, I do not mind because I need WhatsApp. It is a tax, which is targeting the elites – those who are ostentatious. It does not affect the ordinary man in Pader. That is the information I wanted to give. (Applause).

Hon James Kakooza: Thank you, honourable minister. In clause 2, we are amending Act 11 – the Excise Duty Act, 2014. Here, we are trying to define “over the top services”. This is what this clause intends to do. It says, “‘Over the top services’ means the transmission or receipt of voice or messages over the internet protocol network and includes access to virtual private networks but does not include educational or research sites prescribed by the minister by notice in the Gazette”.

That means they would like to exempt people who are doing research according to this definition, and gazette –(Interruption)– Yes, it does not include educational and research sites, and this has been a complaint, that when you go to research –(Interjections)– Of course, there is already a schedule in the Bill, where the minister already gazettes. That is what clause 2 is trying to do. If you read the Bill, clause 2 is trying to define what is exempted and what is not exempted.

Hon AOL BETTY (FDC, Gulu Municipality): Thank you, honourable member for giving way. I would like to give information that if you are sending Shs 100,000 and you want the person receiving the money to withdraw exactly Shs 100,000, you pay Shs 103,000, which attracts more fees than the Shs 100,000. You are giving that person Shs 103,000 yet you are also paying a sending fee, which is more than what you could have paid if you were to send Shs 100,000.

Mr Speaker, that is a challenge to us. You want to meet the fees for your mother and yet they are going to charge you more on what you intend to pay. Thank you.

HON ABRAHAM BYANDALA (NRM, Katikamu County North, Luweero): Thank you, Mr Speaker and honourable colleagues. Government does not have a money minting machine but generates money through taxes. At the end of the day, every service needs money. If we don’t pay taxes, we are reducing on the services to provide.

Therefore, I appeal to my colleagues that if we want to improve the services offered to our people, we must pay taxes. We must also broaden the number of people that pay taxes. Let us ensure that everybody gets involved in paying taxes.

Members have talked about boda boda cyclists; I want somebody to get out of this House and board a boda boda or a taxi from Clock Tower to Ggaba; the boda boda will charge higher than a taxi. Therefore, colleagues, this question that we are going to get them out of business is not true –(Interruption)

 

 

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