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

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

 

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 16^th 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