The mistake with Mobile Money tax

Tuesday July 10 2018

James Abola

James Abola 

By James Abola

There have been many complaints and confusion about the mobile money tax. It is a sad spectacle seeing government officials appearing almost brainless as they first defended then changed and apologised for the tax. When the history of Uganda in the year 2018 is told, people will talk about the mistake tax also known as the mobile money tax.

The President as well as the Minister of Finance have said the percentage levied is a mistake. The rate should have been 0.5 per cent and not 1 per cent. That confession exposes a long line of people who should have caught the mistake before it was signed into law.

The mistaken people are all over government from the President, through ministry of Finance, Parliament and Uganda Communication Commission. Many people warned about the folly of the mobile money tax before parliament passed it and even more warnings were made before the president signed it into law.

The ‘mistake’ is, therefore, the inability of people in government to listen to feedback from the public or to use common sense when told that something is ‘order from above’.

There is yet another mistake with the Mobile Money Tax. Between July 1st and 4th the telecommunication companies were charging the tax four times. They charged when a person deposited money into their wallet, then charged when person sent the money to another wallet, charged when the recipient got the money and finally charged when the recipient withdrew the money.

Uganda Revenue Authority (URA) has now told telecommunication companies not to tax people when they deposit into their wallet or when they use mobile to pay taxes.

There is a third mistake that even URA is quiet about. The calculation of the tax is wrong and in effect, people are paying about 1.02 per cent instead of 1 percent. The tax should have been discounted as is the case with VAT.

The fourth mistake is that the whole idea of taxing people for keeping money or withdrawing it from their mobile money wallet has no merit. The tax cannot be explained. It should simply be rescinded.

James Abola is a business and finance consultant. Email: [email protected]