Uganda Parliament Approves Mobile money tax in new excise duty amendment bill No.2

Mobile money kiosks in Uganda helps many rural people to access and transfer funds.Photo by: ANJCORPS

Parliament has approved the Excise Duty (Amendment) (No.2) Bill, 2018 effectively reducing the mobile money transaction tax from 1 to 0.5 per cent. MPs voted on the bill on Tuesday afternoon following last week’s botched vote due to lack of quorum.
Before the amendment, the bill that came into effect this year, received countrywide condemnation, putting several transaction agents out of business after customers abandoned the popular and convenient payment method. President Museveni tasked Prime Minister Ruhakana Rugunda to table an amendment to the bill that would reduce the tax from 1 per cent on all mobile money transactions to 0.5 per cent.
At least 154 MPs are required to pass a bill into law. State minister for Planning, David Bahati, said government intends to collect Shs 115 billion from the mobile money transaction tax to finance part of the FY 2018/2019 budget.
Despite attracting protests from some members of parliament and the public, 164 MPs voted in favour of the tax against 124. A total of 288 out of the 458 MPs in the tenth parliament participated in the vote presided over by the deputy speaker of parliament, Jacob Oulanyah.
In the parliamentary finance committee report presented before parliament last week, the committee chairperson, Henry Musasizi said mobile money is an efficiency gain and should be taxed. He said money has migrated from the traditional payment systems like banks to digital platforms.
Musasizi added that using mobile money is a choice since there are other payment methods, which also attract taxation. On the other hand, a minority report presented by three MPs demanded that the tax be scrapped in its entirety. The MPs cited absence of equity, discrimination and lack of a clear collection mechanism.
Africell Money moves to raise MoMo.Internet Photo

The minority report was compiled by Nakaseke South MP, Lutamaguzi Ssemakula, Kachumbala County MP, Patrick Isiagi Opolot and Kagoma County MP, Moses Walyomu.
Luttamaguzi cited proposals by various stakeholders including the ministry of Finance, banks, civil society organizations and mobile money dealers among others opposed to the tax.
Most of these, according to the minority report, argued that mobile money tax amounts to double taxation given that government was already charging 15 per cent excise duty, 15 per cent on transaction fees and l0 per cent withholding tax on agent commissions.

“Tax Justice Alliance submitted that the proposed tax on mobile money will cause financial exclusion as most of the people will opt out of the payment. They proposed that the tax be dropped,” said Luttamaguzi.
The vote followed the National Resistance Movement (NRM) party caucus meeting held at State House Entebbe on Monday, chaired by President Yoweri Museveni.
As has become almost a norm for MPs to pass controversial bills, sources claim that each legislator who attended the State House meeting pocketed Shs 5 million. However, we unable unable to independently verify the claims.

Kasozi Nasser
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