Economists and business experts have expressed their skepticism and lambasted Government over the introduction of the mobile money and social media taxes that have caused national unrest among Ugandans.
Speaking during the 8th Annual International Leadership Conference 2018 organized by Makerere University Business School (MUBS) in Entebbe on Wednesday under the theme: “Africa Business Leaders: Creating The Change Africa Needs”, Dr. Fred Muhumuza, an imminent economist indicated that government didn’t do enough home work to understand what they were taxing.
“Mobile money shouldn’t be taxed because we (Ugandans) are already paying for services such as Water and Electricity bills through mobile money that are already subject to Value Added Tax (VAT) and other taxes. Several communications show that people transacting on mobile money were actually paying taxes because URA has put an avenue that one can pay their taxes using mobile money. This is a bad signal to government on the less thinking that went into the whole mobile money tax law because policy making in Uganda has now become more of directives and politics and as a result people have abandoned using mobile money and have also found other alternatives to access social media minus paying the 200 shilling daily Over-The-Top (OTT) Tax”, Dr. Muhumuza explained.
Dr. Muhumuza also asserts that the mobile money and social media taxes will not save government because it has huge debts to pay.
“Debt is number three in the national budget because 10 percent is allocated to debt service as a result of the debt to Asset mismatch. Government borrowed money on a short term basis and invested it in areas that will help the country in the future, it’s now time to pay the lenders and government doesn’t have the money. Government has now resorted to taxing mobile money and social media because the investments in infrastructure haven’t stimulated the economy to grow and empower people to pay taxes. As a result of the debt to asset mismatch, other sectors such as Health, Education and Agriculture are being undermined and yet they are necessary to grow the economy”, stressed Dr. Muhumuza.
He added;
We have big investors like Bujagali who aren’t paying taxes. Government this year removed taxes on Bujagali hoping the energy cost will come down but it hasn’t. Government needs to ensure that big entities like Bujagali aren’t exempted from paying taxes. Government also needs to balance the revenue strategy and income levels by increasing people’s incomes through empowering them economically in addition to attracting more businesses that are able to pay more tax.
On the continued depreciation of the shilling, Dr. Muhumuza disclosed that little is produced in the economy and yet the consumption levels are high because Uganda imports more than it exports.
Dr. Muhumuza asserts that government needs to slow down on the treasury bills and bonds stressing that though it is a lucrative area, they haven’t created anything into the economy. Dr. Muhumuza adds that government needs to cut down on it’s expenditure in infrastructure and allocate money to Agriculture and setting up factories.
On the continued misuse of the youth livelihood funds (YLP), Dr. Muhumuza asserts that the problem is with ministry of finance that lets sectors do the planning and only submit a budget requirement.
“Ministry of finance needs to go beyond the financing of different entities and ask where the economic development is going to come from. The people deciding who gets the YLP Funds, they themselves aren’t business managers and that’s why initially we had put the money into the youth venture capital Fund in partnership with commercial banks because they have a good screening methodology on business ventures that are eligible to access the funds. If you let government officials determine the screening, then it becomes a political decision”, Dr. Muhumuza revealed.
Dr. Muhumuza also cautioned government on the revival of Uganda Airlines saying that it shouldn’t be an objective of government when there are other needs that can be financed with the money.
“Going to borrow to start a National carrier because of the assumption that so many people fly in and out of Uganda is not viable because already government is cutting down travel of it’s own ministers and officials and yet they are the same people who fed into the decision of the National carrier. The market for the national carrier is already disappearing. Tourists come from different places and may come from places where the carrier mayn’t be going”, Dr. Muhumuza stressed.
MUBS Principal, Prof. Wasswa Balunywa Lashes Out At Government:
During the conference, MUBS Principal, Prof. Wasswa Balunywa also lashed out at government on the mobile money and social media taxes.
“Why should government decide without research? Prof. Balunywa asked. Academia is there to back up policy because when policies are made politically without technical Input from experts, the country ends up in a mess. Government needed the academia as a think tank to analyze the mobile money and social media taxes before they were passed into law”, Prof. Balunywa stated.
For government to effectively deal with unemployment and poverty, Prof. Balunywa called for the education of the girl child so as to keep them in school and avoid teenage pregnancies saying that teenage girls who deliver babies are susceptible to perpetual poverty.
Prof. Balunywa also emphasized the need to concentrate on science to improve on technology and changing the negative attitudes people have towards technical and vocational institutions and Entrepreneurship. Prof. Balunywa said that most technical and vocational institutes are empty because people view skills such as plumbing and others as courses for failures.
Prof. Simon Gicharu, the proprietor of Mt. Kenya University who was a key note speaker at the conference called for the redevelopment of university curriculums so as to come up with curriculums that address the challenges in societies and in the corporate world.
“Universities should be looking ahead and preparing the country into the future. There is need to do business or education re-engineering so as to be universities that are challenging the future because courses at universities aren’t taking cognizant of the developmental changes that have taken place over time”, Prof. Gicharu stressed.
The chief Guest of the day, Vice President Kiwanuka Sekandi commended MUBS Principal Prof. Balunywa for spear heading national and international debates on business in Uganda and added that what Ugandans and other African countries need is more of local entrepreneurs with capacity to spearhead development in their own countries.
