If a proposal by MPs is adopted, every mobile phone user will pay an annual Shs5,000 tax for each handset, a move legislators say will help raise more revenue.
The proposal by the shadow finance minister, Mr Geoffrey Ekanya (Tororo County), has already been endorsed by the Budget Committee of Parliament chaired by Mr Amos Lugoloobi (Ntenjeru North).
With an estimated 17.5 million mobile phone handsets in the country, this tax would fetch about Shs87 billion annually if adopted by Parliament.
For the financial year 2014/15, the government needs Shs14 trillion to run its operations- up from Shs13 trillion for this current financial year.
“Those with mobile-phones should pay Shs5,000 every year and the money will finance government activities,” Mr Ekanya said at the committee meeting yesterday.
Except for Kole County MP Fred Ebil, who opposed the idea, saying it would increase the burden on tax payers, the rest of the committee endorsed Mr Ekanya’s idea.
The idea came up for discussion as the committee debated a request by the Electoral Commission to have their salaries that were set 15 years ago reviewed.
The chairperson of the Legal Affairs Committee, Mr Stephen Tashobya, told his colleagues on the Budget Committee that Shs57.3 billion was needed to effect the salary changes for the EC.
However, because of the constrained resource envelope, the Finance ministry ignored the request.
It was then that Mr Ekanya proposed the mobile phone tax as a way of raising revenue.
He also proposed that tax on bottled drinking water be raised, before advising that those who think the tax will affect them “to always travel with their own water”.
The MPs also rejected the argument that Ugandans, especially those in the countryside, could not afford the Shs5,000.
“We used to pay service charge. This money is little. They will pay, they have the money,” Mr Bakka Mugabi (Bukooli North) said.
Col Fred Mwesigye (Nyabushozi) said the tax would be a motivation to work.
“Some Ugandans are lazy because they don’t pay taxes. Let us put this tax and they will go and work,” he said.
Responding to the proposal yesterday, the Uganda Communications Commission boss, Mr Godfrey Mutabazi, was cryptic.
“Let’s put it this way, everyone who aspire to advance in ICT, must be taxed,” he said.
The civil society, however, dismissed the idea, saying it was another attempt at over-taxing Ugandans yet offering little in terms of accountability.
“Government priorities are not in line with what the people want hence the extra revenue they want will not help the ordinary Ugandan,” Ms Cissy Kagaba said on behalf of the Civil Budget Advocacy Group, an arm of civil society that monitors the budget.
“We wouldn’t mind paying the Shs5,000 but the funds are not put to the right use and end up benefitting a few people. Even the proposed Shs5,000 will be stolen with impunity,” she said.
“How will they track Ugandans with phones when the sim card registration failed?”
The Finance ministry spokesperson, Mr Jim Mugunga, however dismissed Ms Kagaba’s argument as defeatist, saying the ministry was committed to ensuring budget discipline.
Mr Mugunga said they would only respond to the proposed phone tax after receiving communication from the Budget Committee.
AGAINST THE TAX
Eddie Kwizera (NRM, Bufumbira East): “This proposal will never pass. We are going to block it in public interest. We are already paying taxes through airtime. The prices are inclusive of taxes. You can tax an income or transaction and not usage because owning a mobile phone is not a transaction. If they want, they can increase other taxes on usage but not to impose taxes on ownership.”
Usher Wilson Owere, National Union of Trade Organisations chairperson: “There too many taxes imposed on people and yet the earning of our people have not improved, there is no minimum wage for workers there is a lot of contradictions ,jobs are not there. Our MPs should first think about the welfare of the citizen. In any case, such a tax will curtail the growth of the ICT sector which is key to the development of our country.”
Najib Musoke, Mobile phone dealer in Kampala: “We request our MPs to drop the proposal. It is going to discourage people from using mobile phones and this will kill business. The economy will also be affected. In any case, people are already paying taxes on airtime why tax them again? Is it a crime to own a mobile-phone? Let them show us where their proposal has worked so that we can also copy. Let those MPs ask the government to charge the telecom companies not users. They can afford the Shs5,000 but our people in the villages cannot.”
Credit to Monitor