Over 150,000 mobile money agents’ jobs are at stake following the government’s tax proposal on mobile money transaction.
According to the tax proposals contained in the Excise Duty Act of 2018, a tax of 1% of the value of the transactions on receiving money, making payments and withdrawing money.
Civil Society Budget Advocacy Group (CSBAG) has contested the move arguing that the tax does not meet one of the principles of taxation which is fairness and will frustrate Ugandans. Civil societies question government’s move to tax mobile money.
“The new proposed tax does not cut across. Why isn’t the same tax be put to commercial banks yet they are all in the business?” Carol Namagembe the programmes manager CSBAG wonders.
“We don’t need to be desperate, there are other ways to collect money”, Julius Mukunda the Executive Director CSBAG says.
“Sometime back, we raised a tax proposal of 0.5% on the value of withdrawal and depositing in banks but Ministry of Finance threw it out as a bad economic principle. Here we are and they are proposing a 1% on mobile money which will impact on the end user”, David Walakia, the budget policy specialist CSBAG notes.
Government is proposing a new tax on mobile money transactions. In the excise duty (Amendment) Act of 2018, a tax of 1% of the value of the transactions on receiving money , making payments and withdrawing of money.
With the country battling ever increasing levels of unemployment, experts argue that mobile money has employed over 150,000 people majority being the youth and women, which government is frustrating with such a tax.
“This will discourage mobile transactions and will slow down economic growth,” Julius Mukunda the executive director CSBAG argues.
There are over 22 milion mobile money accounts. Henry Kimera, the Consumer Education Trust Team leader says.
“When one’s phone is robbed, one is sure that his money on mobile money is safe . But the tax will frustrate most users who will end up moving with their cash which can easily be stolen”, says Henry Kimera.
Civil societies are now concerned that this could lead to the rise of black market operations such as money laundering.
Civil society budget advocacy group is now set to launch a pledge book to be signed, targeting 250 MPs in a move to reject the proposed tax on mobile money.