- In light of telcoms, therefore, we pay Value Added Tax, which is derived from services that are not part of the basic voice offers and are available separately by the end user, who happens to be you and me.
- This suggestion as stated in the letter by the President may not be the desired solution for the current state of the economy given the additional disadvantages as has already been analysed.
A tax is a financial charge or levy imposed by the State on its people. Uganda not being a non-tax revenue State, relies mostly on taxes as a source of revenue while any other shortfall is met through borrowing. Against this background, the tax system and types of taxes administered therein need to be good.
In a letter that was widely circulated on social media platforms, President Museveni suggested to the Ministry of Finance (head of Uganda’s fiscal policy approved by Parliament and implemented by URA), that a small fee of Shs100 should be imposed on all SIM cards that use Twitter, Facebook, WhatsApp, Skype et al in order to generate additional revenue whose estimate he put at Shs400 billion.
As they stand, tax laws impose a tax on airtime in form of Value Added Tax - it being a taxable supply under the VAT Act. Similarly, telecomcommunication companies are charged excise duty under the Excise Duty Act - that is for the services they provide and anything incidental thereto.
In light of telcoms, therefore, we pay Value Added Tax, which is derived from services that are not part of the basic voice offers and are available separately by the end user, who happens to be you and me.
Pursuant to the above, as subscribers to these telecom services, we indirectly participate in the payment of the 20 per cent excise duty on any value added services such as mobile money transfers and usage of airtime in relation to data bundles, among others, whenever we use or download and access these social media platforms from Google play store and other stores through the data bundles.
Social media being a widely used platform for communication, and most importantly as means to access of information, imposing of taxes thereon will be an impediment to the enjoyment of various rights even when the Internet penetration in Uganda is at 31.3 per cent in relation to the population, according to the Internet World Stats.
Adam Smith in his book, The Wealth of Nations, enunciated various cannons of tax, which include fairness (ability to pay). This canon focuses on equity, meaning that a tax should be imposed on individuals in accordance with their ability to pay. Paying double tax is surely not in our ability as citizens and it is not fair either.
This suggestion as stated in the letter by the President may not be the desired solution for the current state of the economy given the additional disadvantages as has already been analysed.
What then shall we say to these things? URA should only be vehemently vigilant in its audits of the telecoms to ensure that revenue is collected in full. This will relieve the 31.3 per cent of the national population from paying a double tax through the additional Shs100.
Only Telecom companies and Internet service providers stand to be the beneficiaries of such an additional tax.