MPs approve controversial mobile money tax

MPs approve controversial mobile money tax
A section of NRM MPs earlier putting up their hands in favor of the mobile money tax.

Parliament has approved the Excise Duty (Amendment) (No.2) Bill, 2018 effectively reducing the mobile money transaction tax from 1 to 0.5 percent. MPs voted on the bill on Tuesday afternoon following last week’s botched vote due to lack of quorum.

At least 154 MPs are required to pass the bill into law. The State Minister for Planning, David Bahati, said government intends to collect Shillings 115 billion from the mobile money transaction tax to finance part of the 2018/2019 financial year budget.

Despite attracting protests from some Members of Parliament and the public, 164 MPs voted in favor 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 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.

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 Finance Ministry, the banking sector, 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 percent excise duty 15 on transaction fees and l0 percent 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. Sources claim that each legislator at the meeting pocketed Shillings 5million. However, our reporter was unable to independently verify the claims.