The mobile money tax that came into effect on the first day of this month continues to take an extensive toll on mobile money dealers, with some thinking of opting out of the venture.
The introduction of the tax has since kicked up dust, with critics saying that government is sabotaging financial inclusion. Protests have been staged and withering comments taking aim at the government have widely spread in media both locally and internationally.
President Museveni has since released two missives explaining why the tax is needed and the government is taking several steps to see how the social media and mobile money taxes can be collected from the citizens, without sparking off outbursts and ruffling any one’s feathers.
Hunting for new business
According to mobile money operators, who have also staged demonstrations and released stamements, calling on the government to remove the taxes, business has extremely slowed down.
In Ntinda, a posh suburb in Kampala, Richard (other name withheld), says that he’s been making the highest number of transactions in the area, receiving about 80 customers on some good days. He operates the business in a market area, putting him at the center of money transactions. But he says the numbers have reduced and he currently averages around 25 transactions. “I have been getting 80 transactions a day but I currently get 26 to 27 transactions,” he said. According to Richard, every customer who withdraws money hits him with the sad news of, “I’m not returning.”
In Nakawa, this reporter talked to Mercy, an agent of Airtel Money and she said that before the tax she was making about 25 transactions in a day. These days she gets as less as 5 customers. According to her, “The tax is only making things worse and we have been suffering from unemployment in Uganda for quite some time now.” She added, “Those of us who have started mobile money businesses are now getting pushed out of business. Does this government want more unemployment?”
Mariam is also a mobile money agent in Nakawa and she says that her commission has been reduced by her employees, MTN Uganda. We were not able to independently verify this. Mariam who had been making over 50 transactions now gets less than half of this. According to her, the tax has sent away the customers, and since she can’t operate a business without customers, she is thinking of venturing into other things.
There are many other complaints like these from mobile money agents. This can be corroborated by a survey that was released Tuesday by WhitWhiteheadmunications, showing a dramatic fall in the number of people using mobile money.
BREAKING: Ugandans 'vote' against #SocialMediaTax #MobileMoneyTax https://t.co/ZQHsHgWptC via @WhiteheadComm #UGtaxSurvey #SocialMedia pic.twitter.com/k2QlH57OtB
— Louis Jadwong (@Jadwong) July 18, 2018
Government is, however, starting to hear people’s voice and it has for now suspended the tax from being charged on sending and deposits. It has remained on withdraws. According to mobile money agents, most mobile money service users come to withdraw money. According to the central bank, withdraw transactions more than double sending transactions. The government hopes to collect Shs115 billion by charging only 0.5% on withdraws. In the first week of implementing the tax, about Shs5 billion was collected, according to the junior minister of Finance, David Bahati.
Related:
Govt to tax only mobile money withdraws; OTT levies retained
Uganda second largest mobile money market in Africa but new tax poses a threat
