The Dynamics Of MM Tax; Is
President Yoweri Museven Trying To Tax His Way Out Of Power Or Trying To Save The Collapsing Banking Sector From The Mobile Money Revolution
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| IS President Museveni a good student of political science? |
There is famous saying
that history never repeats itself, but its clueless people who inadvertently
repeat mistakes that collide with historical happenings of the past.
Over the years, one of
the most contested issues in the world has been taxation. And history shows us that governments that have
instituted insensitive taxation have suffered the wrath of the people.
Powerful monarchies
and kingdoms have all collapsed as a result of the crude taxation policies.
In fact most sensitive
politicians have been voted into power on account of their promise of a
friendly taxation policy while others have collapsed as a result f their
insensitivity about the issue.
In America for
instance every election has mostly been contested basing on tax policies. Clever
politicians have been sensitive enough to tax the rich to give the poor
majority a sense of national belonging.
Arguments about
whether to tax the rich is a counterproductive given the fact that it appears
as though you appear to be taxing prosperity.
The argument has always
been that it’s stupid to tax the rich because it amounts to punishing
hardworking people and therefore encouraging the emergence of a lazy class. Therefore
wise leaders have always tried to strike a balance between taxing the poor and
the rich in more tolerable and largely acceptable proportions.
Too Much Taxation
Now for the case of
Uganda today it’s unbelievable how it has senselessly decided to tax everything
leaving no breathing space for the masses.
The idea of broadening
the tax base is not bad at all but the methodology used by the NRM govt has
made it look brutal.
In a space of just six
months alone president Museveni’s government has instituted more than six different
tax regimes.
Before Ugandan landlords
could get to terms with the rent tax, we have seen the introduction of mobile money
tax, social media tax and a host of others.
A good government makes gradual introduction
of new taxes. You cannot introduce three different taxes in every financial
year and you survive the wrath of the people.
This reality of having
rent tax, mobile money tax and social media tax in a space of less than two
months has put President Museveni’s credentials as a revolutionary leader in
balance.
Both the poor and rich
are totally in disgust with the tax regime imposed by the NRM government.
In Uganda everything
you buy is taxed especially through the value added tax. As I write now the
prices of fuel have gone up due to the rigid taxes imposed on it.
That’s why there has
been a lot of outrage when government imposed the tax on social media and
mobile money. Of course you can argue that the social media tax targets the
affluent intellectuals who are not so much involved in production.
But what about mobile
money tax which obviously hurts business development.
Conspiracy Theory
I was of the view that
maybe the decision to tax mobile money transactions was done to make sure that
the banks resurrect from their downfall that had been orchestrated by the
mobile money revolution.
Because it appears
that the MM tax will make it cheaper to the bank than the phone for transacting
money.
I once wrote on this
blog that the MM revolution was the major reason why banks were collapsing at
an alarming rate.
Is government tactical
enough to be trying to save the banks from being swallowed by the mobile money
revolution?
I highly doubt because
this government lacks the wisdom to do that (save the banks by taxing MM).
Am of the view that they are just trying to siphon
money from the gullible Ugandans by taxing everything they can land on.
The Dynamics Of The MM Tax
And in any case when
you keenly look at the dynamics of the MM tax it clearly shows that the users
are going to suffer double taxation whereby the sender of the money and the recipient
will be taxed.
For instance if you
send one million shillings to someone in Mbale you will first deposit it on your
phone at a cost of !% exercise tax which amounts to 10,000 shillings remaining
with a balance of 990,000.
Once the money is sent
the recipient will have to incur the telecom company charge of 2,000 shillings.
Then the recipient will
need to incur the withdraw charge of 12,650- shillings, meaning that the person
will receive 955,815 shillings.
Now the transport to Mbale
is around 10,000 to 12,000 shillings making it around 24,000 if you are travel
to and from Mbale yourself.
This means that it’s
logical to take the money by yourself since you spend almost 45,000 shillings
to use mobile money, while transport is just half of that.
So this makes the MM
tax totally illogical. Clever people
will abandon the mobile money and use buses to deliver the money. Yes it may be
tedious, time consuming but worth it since it has the extra dividend of
physical contact between the donor and the recipient.
We know that the
mobility of money is an indicator of economic progress. Why would you tax it
beyond reasonable proportions?
The Social Media Tax
President Museveni bragged
that he will impose taxes on social media to curb the rumor mongering.
Granted, it’s good to
tax the rumor mongers. But how sure are you that all the users of social media
are rumor mongers?
So it’s obvious that
the social media tax was not imposed for generating revenue but with malicious
intentions.
This makes it
untenable for government to defend its claim that it’s broadening the tax base.
You cannot broaden the tax through malicious maneuvers.
In any case there are
students who use social media as a tool for their course works.
They converge on the
social media platforms for constructive intellectual discourse not rumor
mongering as president Museveni thinks.
With all this you would imagine that perhaps president
Museveni is taxing his way out of power because the people will surely rise up
in disgust like it has happened in many parts of the world.
The Historical Dimension
For instance it was
the tea tax that caused the American Revolution. the Britons had imposed it in
1773 but two years later the American people ganged up and fiercely fought for their
independence in 1776.
As a student of president
Museveni is aware that it was the unfair tax regime that caused the French revolution.
King Louis 16th
tried to raise taxes and taxed the third estate so heavily that it became a
matter of time before he was deposed in 1789.
So it’s really inconceivable,
actually untenable for NRM to expect any future electoral victory if it continues
to enforce such a harsh and brutal tax regime.
What is surprising is
that the local council elections are just around the corner. It’s highly
unlikely that the citizens will vote without the issue of these brutal taxes on
mind.
Is president Museveni trying
to make history repeat itself like it did in America in 1776 and France in 1789
where brutal tax regimes caused revolutions in those particular countries?
The
author Fred Daka Kamwada is a Ugandan blogger; he is on kamwadafred@gmail.com
