Effective 01st July 2021, Uganda’s newly approved taxes will start biting Ugandans. Since am not an economist of the sort, I will focus this write up on the 12% levy on internet bundles that is replacing the Over the Top tax (OTT) commonly known as the Social Media Tax on the Uganda’s streets.
The new Internet Access Tax is one of those new taxes that government of Uganda is introducing to raise the tax base to be able to offer social services and foster infrastructure development in the country. With Uganda’s staggering public debt standing at Shs65 trillion in April 2021 up from Shs49 trillion in 2019 and expecting to increase, government of Uganda looks at over taxing as a way to service the debts.
After being approved by parliament in April this year dubbed the Excise duty (Amendment) Bill 2021 hence introducing a 12% duty on internet data bundles, Ugandans whether using social media or not will start paying taxes before accessing internet in Uganda.
Experts say the new tax will further impede access to internet in Uganda at a time when the Covid-19 pandemic has pushed many institutions, businesses and organizations to resort to online platforms to remain operational. Currently Ugandans can do banking, shopping, studying, meetings and other things online because technology comes with new improvements to ease work.
However, studying, reading news, watching TV, listening to radio, meeting and other activities will be stifled further by the new tax which will make internet more expensive and less accessible.
Prior to the introduction of OTT in 2018 which targeted to raise between Shs400 billion and Shs1.4 trillion from social media users annually, it was attributed to the increasingly critical citizenry which president Museveni said there was too much untaxed gossip (Lugambo) on social media.
Government seems not to have raised the set targets as Ugandans resorted to Virtual Private Networks (VPN) to bypass the daily Shs200 for anyone to access social media apps like LinkedIn, Telegram, Whatsapp, Twitter and Facebook. This new Internet Access tax will be difficult to bypass and Ugandans will have no other option but to pay or quit.
According to Uganda’s communications regulator UCC, by the second quarter of 2020, Uganda had 18.9 Million Mobile Internet subscribers which is indeed a bigger tax base for the country grappling with a high appetite for loans and growing public debt burden but me and you doubt if all these will succumb to the new policy and pay for the expensive data bundles with a slower internet across many areas in the country.
Therefore, what lies ahead: As Covid-19 continues to ravage the world and Uganda in particular with businesses opting to survive with the help of online platforms, accessing them will become more difficult because of the high price of data bundles.
The growing digital space which has seen banking, studying, shopping, delivery, online newspapers, watching Tv, meetings, listening to radio all accessible online. Both markets and audiences will go down and businesses will be stifled as the 12% Internet Access Tax takes effect on 01st July 2021.
From my perspective of a journalist, several newsrooms had shifted focus to online platforms to stay afloat with increased subscription to e-papers, live streaming on Facebook and Youtube and online broadcasting, all these will feel the pinch of the new tax which will suffocate the industry further.
The digital space for both the industry and the audience will survive at the mercy of government which is only looking at raising taxes than the real impacts to the common Ugandan who grapple with paying the other taxes like VAT, PAYE, Capital gains tax, rental taxes, excise duty, import duty among others.
Moving forward, here the questions as the Covid-19 lockdown bites Ugandans, how will studying online be possible for the struggling education sector, how will working from home be possible, how will praying and meeting online be possible, how will shopping and delivery online be really possible, how will innovations and tech research and businesses thrive, how will online news sites and news apps stay in business??
All the above unanswered questions even after the lockdown will make subscribing for data bundles in Uganda no longer a common need but a luxury and will be so difficult for those who earn a living on the internet to survive amidst the new normal ushered in by the Covid-19 pandemic. Countries facing the reality of the Covid-19 after effects are instead making internet more accessible to foster economic recovery.
The Writer is a Journalist and a Content Editor at Opera News- Nairobi