First pay taxes and demand services
Quite a number of headlines both in the print and other media have highlighted the angst that met the OTT (over-the-top) tax. MTN, Airtel and Africell are already deducting the taxes.
Mobile Money taxe 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 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.
Then there was the discrepancy between the 1 per cent and 0.05 per cent 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 world over. As a student, I witnessed the largest protest in central London on March 31, 1990 shortly before the Poll Tax came into force in England and 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 November 28, 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 and 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 underdeclare calls and government have limited capacity to monitor them.
A large chunk of the citizenry still live in subsistence agriculture or operate in the informal sector. A limited number of scanners and 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 per cent. 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 do so. It has 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’s support of 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 Whatsap calls, etc. A modest tax of Shs200 a day appears a reasonable contribution.
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 and 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 Katungi is the communications and media relations director, Uganda Media Centre.
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