CSOs Oppose Government Plan To Tax Mobile Money Transactions

Godfrey Mayanja is a mobile money agent and has sustained three branches for his business in Kampala for eight years. The mobile money businesses are the main sources of livelihoods for Mayanja and the people he employees. However, with the proposed introduction of a 1% tax on all mobile money transactions, Mayanja now foresees uncertain future for his business. “I think most people will decide to move with cash in their pockets just like it had been before due to the exempted charges instead of using mobile money.” Said, Godfrey Mayanja – Mobile Money Agent.

The mobile money revolution in Uganda began in 2009 with about 7 million accounts. Those accounts have now grown to over 20 million accounts. CISBAG now fears with the new measure of tax, it may stifle economic growth and mostly affect women and youth to a tune of 150,000 jobs. The Civil Society Activists believe if the tax is maintained then more people will resort to moving with cash which will give rise to black markets and increased financial crime. “Finally, we are concerned that the tax could drive off the users the mobile money transfer platform as they resort to insecure cash dealings increasing risks associated with it. The requirements provided in the verification at the sim card registration had started driving down fraud and market laundering through financial systems. By introducing the proposed tax there is a risk that those players could revert to using cash thus increase fraud incidences and supervisory cost.” Said, Julius Mukunda – Executive Director, CISBAG.

“So as well we are discussing the 1%, the mobile money user is already going to have a proposed increase in exercise duty tax from 10-15. So the illustrations that we’ve got were only discussing 1%, please factor in the 15% exercise duty. Now, do you see how the transactions become privatively expensive now.” Said, David Walakira – Budget Policy Analyst – CISBAG. “Now Ugandan have taken financial services in the digital approach and engagement. Now we are going to be penalized for that.” Said, Henry Kimera – Representative, Consumer Education Trust.

The financial experts have proposed an increase in tax duty on fees charged on mobile money withdraws from 10% to 17%. And the tax on interest income on savings currently held as float money which stands at over 800 billion shillings. “All that we are saying is that we have an extra account, the float that these mobile money agents have, it’s around 800 billion Uganda shillings. If there could be interest on the income earned, on the 800 billion shillings that is one-way government should be able to tax and get more resources.” For now, users of mobile money are faced with the future in which transactions are bound to become more costly which will, in turn, have a knock effect on the business of most mobile money agents like Mayanja.