‘Taxing digital economy is unfair’

Tuesday October 20 2020
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Allan. M. Muhereza, the team leader of Youth for Tax Justice Network.PHOTO/COURTESY

You are keen on encouraging youths in the universities across the region to become advocates of tax justice and related matters, why is that so?

Our aim is to create awareness about tax justice and its relevance to solving youth challenges, encouraging and creating space for discussion among youth on issues of taxation, debt and global finance, encouraging youth participation in influencing Natural Resource Revenue Management governance reform and accountability, while also providing a platform for building and sharing knowledge about Domestic Resource Mobilization (DRM) and Natural Resources Revenue Management (NRRM).

We are encouraging youth especially those in higher Institutions of Learning to participate in elective politics to influence decision making at tax policy, legislative level and monitoring levels. We have done this majorly through Inter-University debates on Tax Justice and essay competitions among other engagements.

You are part of the team that has organised National Inter-University debates on tax justice in Uganda, Tanzania, Rwanda and Kenya culminating into the East African Inter-University debate on Tax Justice. What is the intention of this?

Given the central role universities play in knowledge and generating solutions through research, nurturing individual identities, ideologies and future policy makers, it is imperative that the universities become a nucleus of our targeted youth engagement on issues of tax justice.

These debates are geared towards empowering youth in Universities with relevant information on tax policy formulation, implementation and monitoring.

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Secondly, the debates provide a platform for youth to discuss and find solutions to poor governments’ revenue collection, management and utilisation.

What is the quality of the tax debates and how do they relate to things that affect the EAC region?

We believe there is room for improvement. Students have debated the role fair and progressive taxation has in sustainably securing finances required to finance East Africa’s development agenda. They have also explored the relationship between tax justice and the attainment of gender equality, whether taxation of the digital economy is detrimental to youth innovation growth, whether double taxation agreements are key facilitators of Illicit Financial Flows (IFFs) and whether transparency in the extractives sector is the cornerstone in combatting IFFs in the EAC region. All their arguments have been reduced into a student tax justice opinion compendium that will be used to further engage law makers on some of these issues.

How have these tax debates raised interest of youth in tax justice and accountability matters in Uganda?

These engagements have encouraged youth to research more about tax justice and increased their knowledge about it. Some have gone on to become tax justice champions working to bring other youth into the tax justice movement. Working in partnership with other like-minded organisations under the auspices of the Tax Justice Alliance, we have been able to follow up with some of the students who engaged in these debates to participate in the budgetary making cycle, a crucial process in discussing and passing of tax bills. These debates also laid a foundation to the creation of numerous tax clubs and societies in some Ugandan universities; which tax clubs and societies are now engaging students on these issues.

And do you get the feeling that youth in the EAC region are picking interest in these tax and related issues which many consider complex and hard to comprehend?

Yes, youth are picking interest in these issues. For example In Tanzania, we got a number of students pursuing science courses like medicine and surgery engage in these debates on tax which were previously thought to be a preserve for Economics and Law students.

We have also received feedback that these debates should be rolled out to secondary and primary schools. We Understand that Uganda Revenue Authority and Kenya Revenue Authorities have been supporting these debates in school. We hope to work with them and other revenue authorities in the region to make them more inclusive .  

We have also received feedback from some youth in Western Africa requesting the debates to be rolled out in their region.

During the debates, a number of youth appreciated the importance of taxation in not only promoting the socio-economic development of the region but also attaining gender equality. A number were very critical about the prevailing regime of taxation of the digital economy since they deemed it unfair to them.

From your experience, what explains lack of interest about tax education and related issues among some youth in Uganda and the region?

Actually, young people are very interested in tax education and related issues. Every time we have engaged, there has always been a request for more information about taxation to be made available and accessible to them. Whereas there is a wealth of information about taxation and how to make it progressive and fair, the problem is usually with the packaging of the content. Instead of bulky and wordy materials, we are using animations and graphics to educate them. We have simplified the recommendations of the Mbeki report into youth specific content.

Are there evidence of young people who have gone through these programmes/debates ending up as tax justice advocates in the region?

Yes, there is. For Example, our current Youth for Tax Justice Network Coordinator in Rwanda; Mr. Gisa N. Robert was part of the students from Rwanda that participated in the East African Inter-University Debate on Tax justice in 2016. He is not only now our coordinator but has gone on to engage youth and represent youth in Rwanda at different regional on matters of social and economic justice. There are other notable and formidable tax justice champions like Ms. Hazel Birungi, who is currently doing a lot of good work around the gender perspective of tax justice. The list goes on.

How effective are the tax debates in spreading the tax justice gospel and related matters?

Debates are very effective because they serve more than just the exchange of ideas among students; they proved an opportunity to share targeted information to the students about the issues under debate; debates also provide an opportunity for students to research and expand their knowledge about these issues; this encourages the creation of new knowledge from this research or a reexamination of the already existing paradigms about taxation and its role in financing for development. With students also submitting in written submissions of their arguments before the oral debates, this has helped students horn their writing and presentation skills; skills that are necessary for any future tax justice champions.

How are the countries receiving these kind of contest in terms of participation and support?

The reception has been overwhelming; we had a combined 30 Universities from Kenya, Rwanda, Tanzania and Uganda participating in these debates. All universities we have invited to participate have honoured their invite. Whereas we received request to include other universities in these debates, we were not able to do so because of the resources that were available for these engagements. We hope to partner with more like minded organisations to see to it that intervention is scaled up to cover more universities and institutes.

Are the youths ready to provide prescription to effective ways of mobilising and utilizing domestic resources properly?

The youth are ready to provide prescription to this challenge because first and foremost, they are not only the most affected when their governments fail to raise enough resources to invest in public goods and services due to regressive tax systems that perpetuate Illicit Financial Flows, but also stand to benefit most if and when their governments have enough resources to invest in their growth and development.

Already we are seeing an increasing willing of youth to actively participate in political processes. Taxation is political and the surest way of youth providing solutions toward tax reform is by them participating in processes that make political leaders accountable for the budgets and tax bills that they pass every year. For Example here in Uganda, we saw the youth mobilisation against the Mobile Money Tax which led to the Ugandan government amending the excise duty act to reduce the rate of the tax and number of transactions it would apply too. Recently, The Open Forum Initiative, a youth organisation is suing the Ugandan government over the Rental Rates (Income) Tax Regulations having come into force illegally; in Kenya, youth are mobilizing against a digital tax that would be target users instead of the giant internet companies. So youth are already engaging to make taxation fair and sustainable

Any challenges you encountered as you create a pool of tax justice advocates across the region?

The biggest challenge is the rural-urban youth divide when it comes to who we have been able to reach. We believe there is need to reach youth that are not in urban areas and not online.

The other challenge was the fear of hostility from governments once we start talking about taxation from a political perspective. It has always been a delicate dance to have youth appreciate the role of political processes and actors in attaining tax reforms without coming off as partisan.

Whereas governments have been welcome to efforts by youth to promote domestic resource mobilisation; many young people are still afraid of being seen as partisan and inviting the wrath of their governments.

The Covid-19 pandemic has been a challenge this year. Measures put in place frustrated some of our activities and caused delays in execution.

Any achievements registered along the way?

We have developed a critical mass of informed youth about key concepts of tax justice in the region. For example throughout the cycle of the debates, all the students expressed a clear understanding of the importance of taxation in the socio-economic development of their countries. They, howeve,r agreed that for this to be possible, transparency and accountability in public expenditure is of paramount importance.

They argued that youth and youth-led SMEs which are forging a livelihood from the digital economy ought to be excused from paying taxes since the economy is still young. They instead recommended that the taxes should be imposed on multinational companies such as Facebook, Jumia, Google and Amazon which are sourcing income from their countries.

Revising tax targets

Target revised over Covid-19

Despite recording a surplus of slightly more than Shs1 trillion in the just ended first quarter of the financial year 2020/2021, Uganda Revenue Authority seemed relieved by the revised revenue collection target of Shs 19.6 trillion, about Shs2.2 trillion less than the earlier set target by the Ministry of Finance.

URA’s Commissioner General, Mr John Musinguzi, noted that this development—change in budget was instigated by the impact of COVID-19 on the economy, given its direct bearing on revenue collection efforts.

Allan. M. Muhereza, the team leader of Youth for Tax Justice Network.PHOTO/COURTESY

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