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

The CSOs have appealed to Members of parliament (MPs) from the West Nile region to oppose and vote against the proposal; they argue that the levy hurts the poor and threatens to perpetuate the already in equitable income distribution as well as threatening the livelihood of the ordinary Ugandans.

The civil society activists also assert that government is already levying a 10% exercise duty which is being revised to 15% in 2018/19 financial year (FY) on the transactions that a telecom company charges a mobile money user; They say whereas the tax is accounted for by the mobile money service provider, it is indirectly borne by the service users.

In their address to the press early this week, the group wants government to instead increase the proposed 15% exercise duty to 17.5% which they say would generate a significant shs 122 billion.

“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 and that means many people are going to resort to keeping money in their suitcases, rooftops etc” Akuma Moses Odims, the executive director of the Arua NGO network said.

Statistics from Findex indicates that mobile money usage among the youth has nearly doubled from 27 to 51% over the period 2014-17.

Bank of Uganda statistics also show that mobile money transactions increased by about 10 trillion (22.7%) from 44 trillion in 2016 to 54 trillion 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 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 that means that the majority are just poor people whose life will be impacted negatively” he stated

Mr Moses Ma andebo and Akuma Moses Odims

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

Asked about his stance on the proposed tax, Mr Benard Atiku, the Member of Parliament for Ayivu 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.

Atiku said there are many taxable options like 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 800 billion.

They also propose the use of a Tiered exercise duty in which different range of amounts would be taxed at different rates to relief the poor of the burden

While presenting the proposals before the Finance Committee recently, the state minister for Planning, David Bahati, said the proposed taxes that also include among others; another separate tax on social media are envisaged to fetch government 295.3billion combined.