What it takes to review Uganda’s mobile money tax

What it takes to review Uganda's mobile money tax
Mobile money shop

Despite the president’s pronouncement that there was a miscommunication on the mobile money tax, Ugandans will have to wait a little longer for parliament to revise the Excise Duty Amendment Act 2018.

On July 1st, 2018, telecoms started a one percent tax on each mobile money transaction in line with the Excise Duty Amendment Act 2018. The tax was payable right from depositing, sending, receiving and any payments made through mobile money.

The multiple deductions drew outrage from mobile money users who accused government of double taxation drawing the attention of President Yoweri Museveni. In his communication, Museveni explained that there was a miscommunication, saying the mobile money tax should be 0.5 percent and not one percent.

He also explained that the tax is only applicable on those sending and receiving money through mobile money and not those depositing money on their mobile money account. However, the president’s directive can only come into effect following the due process of parliament.

Parliament derives its authority from Article 79 of the 1995 Constitution. It provides that “Subject to the provisions of this Constitution, Parliament shall have power to make laws on any matter for peace, order, development and good governance of Uganda.” It further notes that “No person or body other than Parliament shall have power to make provisions having the force of law in Uganda except under authority conferred by an Act of Parliament.”

Henry Musasizi, the Finance Committee Chairperson, says since the proposal to revise the mobile money tax was made by the president, government ought to table the amendment bill before the house for consideration. He explains that in this case, it is the Finance Ministry, which ought to draft the bill and send it to cabinet for endorsement.

Once approved, cabinet forward the bill to the first Parliamentary council, which is mandated with the responsibility of drafting it. After this process, the bill is returned to cabinet for perusal and dispatched for printing and publication in the Gazette for the public to read.

The mover of the bill then tables in parliament for the first reading before it’s committed to the Finance Committee for scrutiny. The Committee scrutnises the bill and returns it to parliament for the second reading within 45 days. The bill is then read for the second time and debated by parliament, where government is expected to justify it.

This is then followed by the third reading. Parliament can make changes to particulars of the bill before approving it. Henry Musasizi, the Finance Committee Chairperson, says the president’s proposal can only come into effect after August.

Musasizi says currently, Ugandans have no option but to continue paying the tax until the due process is followed.

Musasizi also says that although the focus is on the 1% mobile money level, the initial charges by telecom companies are also very high and should be debated. Jim Mugunga, the Finance Ministry, says they are working with the institutions involved to effect the president’s proposal.

Hamson Denis Obua, the Ajuri County MP, says when the amendment comes back to Parliament, it should be made to meet the public expectation. He says it is very clearly that the first proposal can’t work. Telecoms are still enforcing the 1 percent mobile money levy despite the fact that some mobile money users think it has been revised to 0.5 percent.

Janet Hamala, a mobile money vendor in Kampala, says the 1 percent tax levy has made mobile money costly to their customers. “If you are sending 100,000 shillings for instance, apart from the initial Shillings 1600 mobile money charge the customer pays an additional Shillings 1000 and for that person to withdraw the money is charged Shillings 1000,” she said.

Another vendor at Nakasero market told this publication on Friday evening that the mobile money tax has pushed away many of their clients away.