The Opposition cabinet yesterday asked shadow finance minister Geoffrey Ekanya to drop his proposed tax on mobile phones.
MTN Uganda, the biggest telecommunications service provider in the country, also asked the Parliament’s Budget Committee to reject the idea in public interest.
“The new tax on handsets will discourage people from owning mobile phones and this will obviously have a negative impact on the economy. The sector currently contributes 8 per cent to GDP and with the new tax, this contribution will go down,” said MTN Uganda’s general manager Corporate Services Anthony Katamba.
Shadow minister for Youth Bernard Atiku (Ayivu) told Daily Monitor that Mr Ekanya came under pressure during the shadow cabinet’s weekly meeting.
Mr Atiku said his colleague explained that he was talking about smartphones owned by the rich people.
Mr Ekanya on Monday proposed that every mobile phone user pays an annual Shs5,000 tax for each handset to boost government revenue, a move the rest of the Budget Committee members supported apart from Kole MP Fred Ebil. This newspaper reported on Tuesday that with an estimated 17.5 million mobile phone handsets in the country, the new tax would fetch more than Shs87 billion.
The government is currently faced with unfunded priorities to a tune of Shs2 trillion. This money is not available in the Shs14 trillion budget for 2014/15 financial year.
Opposition legislators and other MPs who spoke to Daily Monitor yesterday also vowed to thwart the new phone tax and critcised the Budget Committee for agreeing to something they called “burdensome”.
Addressing journalists after the shadow Cabinet meeting, Mr Wafula Oguttu, Leader of the Opposition in Parliament, said slapping the tax on mobile phone owners would burden Ugandans, especially in the rural areas, whose lives and businesses heavily rely on the gadgets.
“A phone has become a tool for economic empowerment and for people to improve on their lives and businesses. So, we do not want to make it very costly for them. A phone is no longer a luxury,” Mr Oguttu explained.
Mr Atiku told Daily Monitor the matter came up after Opposition Chief Whip Cecilia Ogwal (Dokolo Woman), Mr Kassiano Wadri (Terego), Mr Atiku (Ayivu) and Mr Ibrahim Ssemujju Nganda (Kyadondo East) complained that Mr Ekanya did not consult the shadow cabinet.
“We were taken aback by our colleague on the proposals,” Mr Atiku said. “Even though he explained that his target was on smartphones, we did not buy it. As Opposition, we cannot be the ones who propose such taxes. Our position has been clear, we argue against taxes which may burden the citizens.”
Yesterday, Mr Ekanya told Daily Monitor that his is merely a proposal for smartphones and that the tax would target the elite. He promised to explain it to voters.