Rising prices: Get rid of some taxes

Author, Phillip Matogo. PHOTO/FILE

What you need to know:

  • Taxes on internet usage must be done away with to partly address a declining economic situation.   

A number of stories thought to have been written by Aesop, a 6th Century Greek storyteller, have often been used to explain human realties and help us gain perspective regarding the same. 

The main characters in these stories are animals, and each story demonstrates a moral lesson. 
There is an Aesop fable about a Greek man who sees a small bird, a swallow, lazily flying about on an unusually warm winter day. 

The man then assumed that summer has begun, so he sells his only coat to throw all caution to the wind by enjoying his life with the proceeds from the coat he sold. 

If you replace the Greek with a Ugandan, and the coat with the Ugandan economy you then realise that our situation is an updated version of this Aesopian fable. 

In Aesop’s world, winter set in again, the little bird died and the coatless man blamed the bird for his misfortune: “By appearing before the springtime you have not only killed yourself,” he moaned, “but you have wrought my destruction, too.”

By early June most swallows have started breeding and by July, the first brood of young has usually left the nest and flown away. 

Their appearance is thus a harbinger of summer, so the moral of this tale is that one swallow does not make a summer. 

It seems that when the economy was reopened early this year, Uganda sold its coat by assuming that the summer of economic resurgence could be largely private-sector driven. 

Few plans have been put into motion, on a macroeconomic level, beyond talks of a stimulus package, to address the winter of a post-lockdown Uganda. 

We all just assumed that with the economy reopening, this magic wand would set everything straight. 
It was as if the single swallow of reopening the economy was all that we required to delude ourselves that the worst was behind us. 

Yet we are faced by a looming economic crisis in the shape of rising commodity prices that have left many citizens financially beclouded and economists befuddled. 

Whether the cause of the rising commodity prices is down to the war in Ukraine or whether there are other underlying economic factors which are afoot, we must remember that our economy is best characterised as underdeveloped. 

We may have abundant natural resources, but much of our economy has remained predominantly agricultural, and subsistence farming still engages a large percent of the population.

We all know that embracing the internet is key to shifting away from this underdeveloped state of our economy. 

The internet produces significant cost savings in many sectors of the economy, resulting in faster productivity growth. 

It also produces lower prices for consumers, resulting in faster growth in living standards.
However, Uganda’s government has been riding the tiger by attempting to tame the internet. 

Internet users in Uganda have to pay a 12 percent tax on data packages, bringing the total tax on internet use to 30 percent after factoring in the existing 18 percent Value Added Tax (VAT.)

This tax replaced the over-the-top tax (OTT), popularly known as social media tax.  

These taxes, punitive in nature, affect the economy a great deal in view of the fact that many businesses moved online to reach customers during the lockdown. 

To ease this economic situation, taxes on internet usage must be done away with to partly address a declining economic situation.

Again, we need to be finding all possible means to unshackle certain sectors of our economy which have been tied down by unnecessary taxes. 

This way, maybe we can eat cassava virtually while enjoying our bread normally.

Mr Matogo is a professional copywriter  
[email protected]


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