ARUA. A section of civil society organizations (CSOs) in Arua district have joined the growing list of people calling upon the government of Uganda to drop the proposed 1% tax levy on all mobile money transactions.

The CSOs have appealed to Members of parliament (MPs) hailing from West Nile region to vote against the proposal.

They argued that the levy hurts the poor and threatens to perpetuate the already inequitable income distribution as well as bullying the livelihood of the ordinary Ugandans.

In a recent press conference, the civil society activists said government is already levying a 15% exercise duty on the transactions that a telecom company charges on a mobile money operator.

They said whereas the tax is accounted for by the mobile money service provider, it is indirectly borne by the service users thus no reason to charge them separately.

“This 1% tax is indiscriminate and yet one of the key reasons for taxation is to reallocate resources, getting money from the rich and allocate it to the poor. Our markets are usually emotional and will react negatively to this proposal forcing many people to start keeping money in their suitcases and rooftops,” Mr Moses Akuma Odims, the executive director of Arua NGO network said.

Statistics from Findex indicates that mobile money usage among the youth has nearly doubled from 27 to 51% from 2014 to 2017.

Bank of Uganda statistics also show that mobile money transactions increased by about sh10trillion (22.7%) from sh44trillion in 2016 to sh54trillion in 2017 and yet most of the users still struggle financially with 64% having no emergency fund, 31% do not have enough food to eat and 59% spend more than what they earn.

Mr Moses Baakole of ACCORD said although the conventional banking system has eluded the poor, the mobile money is now largely seen as a strategy to financial inclusion.

“61% of MTN clients for instance transfer less than 45,000 meaning that the majority are just poor people whose life will be impacted negatively,” Baakole stated

Juliet Eyokia

Mr. Feni Twaib, the chief executive officer of Arua district NGO network (ADINGON) expressed fear of many young people employed in the mobile money sector could end up unemployed if people opt out of the business because of the high taxes.

Asked about his stance on the proposed tax, Mr Benard Atiku, the Member of Parliament for Ayivu County described the new tax as being detrimental to the supply of money among the rural poor.

“Mobile money has increasingly become the cheaper option for people to send money to their relatives, pay school fees and even petty transactions and I think this move is very wrong and might end up discouraging many from using the service” he said

Mr Atiku added that there are many taxable options like on soft drinks, alcohol and cigarettes out of which the government could generate a lot of money.

Other alternatives given by the CSO’s include taxing the interest income on the float mobile money agents deposit in the bank which they say amounts to sh800billion

While presenting the proposals before the Finance Committee recently, the state minister for Planning, Mr David Bahati said the proposed taxes that also include among others, a separate tax on social media are envisaged to fetch government sh295.3billion combined.