As the debate on the new Shilling 200 per day Over the Top OTT commonly known as social media tax and one percent tax on mobile money rages on, Uganda Radio Network traces back the debate by Members of the Tenth Parliament, in which they handled the two taxes. Uganda Radio Network revisits the debate on the taxes and brings you the details of who said what.
A Parliament Sitting chaired by Speaker of Parliament Rebecca Kadaga.
As the debate on the new Shilling 200 per day Over the Top (OTT) commonly known as social media tax and one percent tax on mobile money rages on, Uganda Radio Network traces back the debate by Members of the Tenth Parliament, in which they handled the two taxes.
Deputy Speaker Jacob Oulanyah chaired the session that convened on Wednesday, 30th May 2018, at the Parliament House, Kampala to consider the proposed taxes under the Excise Duty Amendment Bill, 2018 that was presented by the State Minister for Planning David Bahati.
Both the Social Media Tax and Mobile Money Tax have now become a source of controversy. The taxes which came into effect on 1st July 2018 have been strongly opposed by sections of the public with a number of citizens defying specifically the Shillings 200 daily payment to use social media platforms like WhatsApp, Face Book, Twitter and others and opting for Virtual Private Networks (VPN) applications.
The new tax has also seen social media activists petitioning the Constitutional Court saying that the tax, inhibits access to information especially on social media and thereby contravenes section 41 of the Constitution of Uganda.
On the other hand, Mobile money agents and users also have no kind words for the new one percent tax on mobile money transaction. The one percent tax is charged on deposit, receiving and withdraw.
From the Hansard, Uganda Radio Network revisits the debate on the taxes and now brings you the details of who said what.
David Bahati (The Minister of State for Finance, Planning And Economic Development (Planning): Mr. Speaker, I beg to move that the Bill entitled, “The Excise Duty (Amendment) Bill, 2018” be read the second time.
Jacob Oulanyah (Deputy Speaker): Is the motion seconded? It is seconded by the members for Jinja, Kioga and Kinkizi County West. Would you like to speak to your motion?
Bahati: Mr. Speaker, the object of this Bill is to amend the Excise Duty Act, 2014 to raise the point of accounting on telecommunications services; to introduce interest for unpaid duty and limit the interest payable to the amount of unpaid principal tax; to enhance Excise Duty in respect of certain excisable goods; to amend Excise Duty on telecommunications services, and; to introduce a duty on cooking oil and on motorcycles at first registration. I beg to move.
Oulanyah: Thank you. Honourable members, the motion that I propose for your debate is that the Excise Duty (Amendment) Bill, 2018 be read the second time.
However, as you are aware, this Bill was referred to our committee. To start the debate, can the chairperson report on their findings on this Bill and then we can debate the principles?
Loy Katali (Vice Chairperson, Committee on Finance, Planning and Economic Development): Thank you, Mr. Speaker. The Committee on Finance, Planning and Economic Development scrutinized the Excise Duty (Amendment) Bill, 2018 and we are now ready to report.
Mr. Speaker, I request that I go straight to the committee's observations and recommendations.
Katali: Thank you, Mr. Speaker. The committee observed that:
i) A person providing an excisable service becomes liable to pay Excise Duty on that service on the date of the provision of the service. This is meant to clarify when a person providing an excisable service becomes liable to pay Excise Duty, which is the date on which payment is made or the date on which the invoice is made, whichever is earlier.
This will ensure that when the performance of the service is completed or paid for or the invoice is issued, Excise Duty is due and payable irrespective of whether the service is used.
ii) An obligation is imposed on telecommunications service operators providing data for accessing Over the Top (OTT) services to account for and pay Excise Duty on access of Over the Top services.
Currently, voice and messaging traffic has migrated from conventional voice calls and messaging to voice over the internet and online messaging, through applications such as WhatsApp, Viber and Skype referred to as Over the Top service. OTT services do not attract Excise Duty, unlike voice calls that attract VAT and Excise Duty. This is unfair and inequitable for consumers who buy airtime and use it to make voice calls compared to those who buy internet data and make voice calls. This is also intended to clarify who is liable to account for Excise Duty on Over the Top services.
iii) The Bill proposes to impose Excise Duty of one per cent on the value of mobile money transactions of receiving, payments and withdraws.
Use of mobile money is an efficiency gain and should be taxed. Money has migrated from the traditional payment systems like banks to the digital platforms. It is, therefore, important that taxes be levied on such platforms.
Using mobile money is a choice as there are other methods of payment which are already attracting taxes. This proposed tax will generate more revenue and broaden the tax base.
iv) The committee observed that Excise Duty on soft drinks is the highest in the region. This encourages smuggling of soft drinks from the neighboring countries. Government committed to reduce Excise Duty on soft drinks from 13 to 10 per cent in financial year 2018/2019. However, this commitment has not been honored. Excise Duty on soft drinks should be reduced gradually to avoid loss of revenue.
In the financial year 2018/2019, Excise Duty on soft drinks should be reduced to 12 per cent.
Mr. Speaker, the committee recommends that the Excise Duty (Amendment) Bill, 2018 be passed into law, subject to the proposed amendments. I beg to report.
Oulanyah: Thank you. Honorable members, the debate starts now and – as you understand – the principles are known. These are revenue laws and the purpose for which they are proposed are exactly that – to raise revenue. Is there any debate on the principles of the Bill?
John Baptist Nambeshe (NRM Party MP, Manjiya County, Bududa): Thank you, Mr. Speaker. I would like to thank the chairperson of the committee for the report. My take, as I weigh in, is on the proposed one per cent transaction value tax on mobile money.
The intention could be to broaden the tax base but it will exclude the majority of Ugandans from financial transactions. In the Bank of Uganda statistics for 2017, Uganda is second among the partner states of East Africa in financial inclusion and mobile money transactions have gained prominence among the low-income earners. Sixty per cent of our youth participate in mobile money transaction.
The current tax regime actually imposes 10 per cent excise duty on the telecoms, which in my view if it were increased beyond the current proposed 15 per cent to say 20 or 18 per cent, would not impact negatively on the majority of Ugandans who are in mobile money transactions.
Mr. Speaker, on depositing, the charge will be one per cent transaction value tax. Sending money would also attract a one per cent levy and there would be a similar levy at the point of receiving. At all these stages, they have imposed a tax of one per cent.
You know that the majority of Ugandans – the low income earners – transfer almost less than Shs 45,000 on a daily basis. If you levy tax at every stage and if you say such money is migrating from the traditional payment system – the banks – for example, if it is a salary, you would have already paid Pay-As-You-Earn but as you deposit, they charge the one per cent and as it is sent, you pay one per cent and on receiving, you pay one per cent. You would even be taxing condolences. (Laughter)
Therefore, literally even the dead will be taxed in Uganda if we allow this proposed one per cent transaction value tax on mobile money transactions.
Mr. Speaker, it would be better to tax the interest or increase tax on the interest of the float by the mobile money agents because on the Escrow Account, it is currently about Shs 800 billion. If that interest was taxed - which they have left and I do not know why the committee could not see this. This was a very severe omission. If this interest could be taxed, it would take care of whatever intentions the initiators of this tax are looking at.
Mr. Speaker, you know very well that majority of the mobile money clients in Uganda, especially the low income earners, have been talking –(Member timed out.)
Oulanyah: Honorable members, you should use two minutes to allow us to share the time properly. Can I have the member for Kumi and then the member for Lira Municipality?
Monicah Amoding (NRM Party MP, Woman Representative, Kumi): Thank you very much, Mr. Speaker. I rise to oppose the proposed tax of one per cent on mobile money transactions in Uganda mainly because I believe that this tax is going to affect the poor of the poorest and reduce financial inclusion, which we are seeking as a country, for those particular categories of people.
Mr. Speaker, when mobile money transactions were introduced in Uganda, one of the key beneficiaries was the farmers who are at the lowest echelons of the society. In addition, statistics have indicated that the increase of the services of mobile money across the countryside brought on board farmers to a tune of about 53 per cent in the financial sector.
Mr. Speaker, I bring evidence from my district to attest to the fact that this service is very important for farmers. There is a programme called HIFA. This is a programme through which farmers save.
I know of cooperatives which are doing savings through mobile money and many other services through which the poor access money from the financial sector. This includes the poor through the Social Assistance Grant for the Elderly (SAGE) Programme. I also know many other non-governmental programmes that the poor use to access money through mobile money transactions.
The argument of saying that mobile money transactions are benefitting friends and relatives because the transactions are merely sending money to friends and relatives is not very true. (Member timed out.)
Jimmy Akena (UPC Party MP, Lira Municipality, Lira): Thank you, Mr. Speaker. I equally do not support the one per cent tax on mobile money. However, I want to use my time on the proposed Excise Duty on motorcycles. I have not seen anything in the report concerning this proposal.
Mr. Speaker, this is an area from which I feel Government is trying to look for money. It is going to hurt a sector of the economy that is showing some level of growth. I am involved in supporting many young people to acquire boda bodas. These boda bodas are at least giving some people financial stability. When we try to increase the taxes, yet I do not see the justification on those taxes, I am concerned.
On another note, in Uganda, we have taxes on motorcycles, including the ones for competition. This affects the Ugandan team in its international competitions. Uganda is going to compete in August in Zambia but these taxes on motorcycles put us on a very weak footing to compete against other nations.
I would like to hear from the minister or the committee the justification as to why we are putting an Excise Duty on motorcycles. I have imported several of them and we actually pay a lot of taxes at the start. Thank you, Mr. Speaker –( MP Lugoloobi rose_)
Oulanyah: Are you a Member of the committee?
Amos Lugoloobi (NRM Party MP, Ntenjeru North, Kayunga): I am giving information.
Oulanyah: No, please.
Lugoloobi: Mr. Speaker, I am giving information.
Oulanyah: There is nobody holding the Floor at the moment. You give it to somebody on the Floor.
Lugoloobi: I am giving it to the House.
Joshua Anywarach (Independent MP, Padyere County, Nebbi): Mr. Speaker, I am grateful. We are debating the principle of the Bill and this Bill seeks to amend Excise Duty.
Mr. Speaker, from the proposal, the principle is already defective. My understanding of taxation law is that what we call Excise Duty, its opposite is Import Duty. In other words, as soon as any good crosses the border, you impose Import Duty. The internal manufacture of any good in the country attracts Excise Duty. That is the very reason we call it a duty; it is not a levy on an individual. Technically, Excise Duty is just a duty, it is not a tax.
Mr. Speaker, since Excise Duty is levied on a good as soon as it becomes existent in the country, then we cannot actually levy a tax on mobile money transactions. Even over the top transactions you are talking about, where anyone can choose to make a call on WhatsApp - in fact, by the time airtime came into existence, it had already attracted Excise Duty.
Mr. Speaker, for heaven's sake, anywhere in the world – if anything can be cheaper and spur economic development, it is communication.
I think in principle, we are discussing a tax, which is misplaced. I would like to request that we discuss a duty. Therefore, the Excise Duty should be that levy on the airtime when it came into existence – (Member timed out.)
Hon. Member: I donate my time. (Laughter)
Oulanyah : You did not have it. Wind up.
Anywarach: As I wind up, we should also look at the Excise Duty on motorcycles because it will collapse.
Mr. Speaker, you taught me how to give motorcycles to these young people and I copied from your constituency. As soon as they make money – most of them are struggling to make ends meet and yet we also want them to pay taxes.
In addition to the above, when they go to fuel these motorcycles they pay taxes in order to spur economic development. I thought the honourable minister was coming here to say that we have reduced the registration fees on motorcycles. However, he is only adding more injuries to a healing wound. Therefore, the principle is defective. Thank you very much.
Ann Maria Nankabirwa (NRM Party MP, Woman Representative, Kyankwanzi): Thank you, Mr. Speaker. I stand to support the committee report.
The world over, people have problems with the payment of tax and yet they need development. Before we pass the budget, we must pass tax Bills as an obligation of Parliament. The expenditure needs to balance with the revenue. We need to widen our tax base as Uganda. Tax sometimes is a gain –
I support the one per cent levy on mobile money. It is a service gain and I will not be intimidated by anyone. I think we need to pronounce ourselves and speak the truth. One per cent levy is a service gain. If I have to go for a burial and I have to put fuel worth Shs 200,000 into my car, I would just send the money. Therefore, I will not move and save time.
Mr. Speaker, I remember in the Ninth Parliament, we needed to pass money for strengthening our backbone infrastructure for the internet. It is all money.
Today when we look at how burdened we are with the loans we pass here every day; when you look at the Treasury operations this financial year in the budget we are about to pass, it is Shs 9.7 trillion. How will it be serviced if we are now claiming that people are poor and therefore cannot pay tax?
In our tax regime, the rich will pay more and the poor will pay more. However, let us all have an obligation for feeling it in paying taxes as we demand the service.
Finally, good things are paid for. Quick service is paid for. Ugandans and all those standing against tax are using the services given by Government to be able to communicate the decampaigning of the tax. Thank you.
Oulanyah: Thank you. I have balanced the extensions, now two minutes flat. (Laughter)
Cosmas Elotu (NRM, Dakabela County, Soroti): Thank you very much, Mr. Speaker. I also stand in support of the report of the committee and therefore, their recommendations.
I have heard a lot of arguments from various speakers. However, the issue is who will then pay the tax? Where shall we raise money to support our budgets? You know, every other moment in this House, we are passing loans. Unless we realise that we need to get avenues where we shall raise taxes and be self-sufficient, we shall forever stay in the same quagmire.
Way back, we had other taxes like Graduated Tax, which at the end of it brought everybody on board, including the poor people back home. If I may say, a one percent levy on mobile money will not be detrimental across the board.
If you send Shs 1,000 and you pay one per cent, I think that is a fair contribution. If you sent Shs1 million and you pay one percent, it is also a fair contribution on the basis of your income. I stand with the report of the committee and strongly recommend that that tax be stayed in our budget. Thank you very much, Mr. Speaker. (Applause)
Florence Namayanja (DP MP, Bukoto County East, Masaka): Thank you very much, Mr. Speaker. I stand to oppose the one per cent transaction tax on mobile money. Recently, we handled compensation by Rural Electrification Agency (REA) on way leaves and the people who were assessed for their crops such as cassava and beans were compensated with very little money. We were handling the audit queries because money was being deposited on staff accounts to go and pay them.
The recommendation of the Auditor-General was that people should be paid directly through mobile money. If someone is to be paid Shs 30,000 for his or her beans – this is one of the poorest people. I think this tax has not been brought in good faith but to punish the poorest.
I oppose it and I call upon Members of Parliament to think about the poor people and about the transactions we make. By the time you send for example, Shs 20,000 to somebody, by the time it reaches, it will be much less the amount you sent. Therefore, let us rethink and maybe levy somewhere else and leave the mobile money transactions.
Patrick Nsamba (NRM Party MP, Kassanda County North, Mubende): Thank you very much, Mr. Speaker. I think we should, as Parliament, not be moved with the desire simply to expand the tax base, without knowing which part of the population we are touching.
The honourable minister is aware that on the mobile money transaction, 61 per cent send the very little money, below Shs 45,000. That tells you that once you come up with this tax, it is not going to the rich. It is going to affect the poor.
Let us take an example of the Social Assistance Grants for Empowerment where we are paying our people Shs 26,000 a month and you have to take Shs 2,600 plus other charges off them. We will not have helped those people.
It is very easy for a Member of Parliament to say Shs 1,000 is little money. However, for people who are earning less than a dollar a day in this country, Shs 1,000 is a lot of money. Therefore, let us simply not sit here and say this one per cent is little money when we are going to affect the majority of our population –(Interruption)
Lugoloobi: Mr. Speaker, the tax we are talking about is one per cent. The honourable member is misinforming this House that one per cent of Shs 26,000 is Shs 2,600. Mathematically, that is Shs 260. Therefore, out of Shs 26,000, that old person you are talking about would only be paying Shs 260 only.
Remember, the money we are giving to this old person has to be derived from somewhere. Is the honourable member in order to mislead this House mathematically?
Oulanyah: The honourable member has not declared which base he is using. (Laughter)
Nsamba: Thank you very much, Mr. Speaker, for your wise ruling. I would like to conclude by saying that any country whose fiscal policy does not deal with inequality and poverty reduction is destined for failure. (Applause)
Our fiscal policy should always mind the poor. It should always ensure that it is closing the gap between the rich and the poor. I will not support any tax that comes to inflict further pain on the poor. Thank you.
Santa Alum (UPC Party MP, Woman Representative, Oyam): Thank you very much, Mr. Speaker. The Bill proposes Excise Duty on motorcycles. I stand here to oppose, for the reason that most of these motorcycle riders are the youth. They pay a lot of money to the district local governments and even the sub county local governments. Taxing them will be like sending them away from their business.
Secondly, on the issue of one per cent on mobile money transaction; mobile money takes services closer to the people, more so the poor people. These poor people also pay taxes when they buy airtime. They also pay tax on the voice calls. When you now put taxes on mobile money, that means that you are taxing them very many times on the same product when they are using mobile phones –(Interjections)– I will give you later; first hold on.
Mr. Speaker, in the villages, we do not have the banking services. Mobile money is the closest thing to banking our people in the rural areas have.
Now, when we say we are going to tax them, it will discourage them from using something closest to the bank. Then, where are we heading to? If we had banks in the rural areas, I would have no problem because they would have an alternative of joining the banking system.
Thirdly, Mr. Speaker, I would like to ask the committee on the objective of taxing cooking oil. They have not put it very clearly. To me, I feel it would be better to tax soft drinks rather than cooking oil - (Member timed out.)
Justine Khainza (NRM Party MP, Woman Representative, Bududa): Thank you, Mr. Speaker. My discussion is on observation 4 of the committee where they proposed to reduce the Excise Duty on soft drinks from 13 to 12 percent.
The reason they gave is that we are losing Excise Duty because of smuggling at the border points.
My recommendation would be that we maintain the 13 per cent. If the problem is smuggling at the borders, why can't we, as Government, enforce checking at the border points? Why do we allow these people to go through with smuggled products? Let us ensure URA does its work at the border points to check - It is because we may reduce it to 12 per cent but still, people will smuggle from across. So, it may not necessarily be the price.
So, in the spirit of Buy Uganda, Build Uganda, we need to ensure checking at the border points and also promote the standards of our products. Maybe our products could be more superior to those of the other countries. So, how are you going to support them if you do not strengthen the checking at the border points? Thank you.
Elijah Okupa (FDC Party MP, Kasilo County, Serere): Thank you, Mr Speaker. I would like to make a proposal to the Minister of Finance, Planning and Economic Development. Instead of charging this tax on airtime and mobile money, why haven't you thought of reintroducing licencing of vehicles? You can do it like the Ministry of Internal Affairs is handling the people who acquire firearms; if you buy a firearm, you pay Shs 5 million or Shs 10 million and every year, you must renew the licence and pay Shs 150,000. For the vehicles, however, you only pay once when you import the vehicle. I think the people who own vehicles are able to raise Shs 200,000 per year. Why have you never thought of that?
Secondly, this double standard cannot help us and that is why you see the people are even opposing. You have exempted the people who are supposed to pay taxes. You came here to exempt people who are supposed to pay Corporation Tax but now the local people who should be exempted are the ones you would like to tax.
Personally, I would have no problem with taxing everybody but the problem is discrimination. Everyone should pay taxes. I think this business of exempting companies in the name of attracting investors should be discouraged. That way, we will be able to raise a lot of revenue.
Also, can we put this money to a better use? It is because if Ugandans see that the money goes –
We have our ambulances. Mr. Speaker, I do not know where the Government has gone because it is the Members of Parliament now providing ambulances throughout the country. What has happened to Government? We do not get money for ambulances –(Member timed out.)
David Abala (NRM Party MP, Ngora County, Ngora): Thank you so much, Mr. Speaker. In the little commerce I learned in secondary school, there are basic principles of taxation: productivity, convenience, equity, ability and economy among others. I do not know whether these proposed taxes meet these basic principles.
Remember the poverty in Uganda is on the rise and Teso particularly is at 41 per cent. Now, Mr Speaker, if you use those scenarios, the people who are buying these motorcycles are actually poor people. I am worried we are going to force them out of this business. That means insecurity will increase because most of them are going to suffer because of these taxes we are talking about here.
In my view, exempting powerful people in this country from paying taxes is a problem. Let us dwell on those other levels. Targeting the poor youth in this country is a problem according to me.
Mr. Speaker, the argument here says the people go for mobile money by choice. It is not by choice; it is circumstantial. It is the circumstance that forces the poor. For example, in Ngora, I do not have a bank. There is no bank in the entire district. So, where will my poor people go and bank the money? In Omoro District, where you come from, Mr Speaker, there is no bank.
That is why we are saying, Mr. Speaker, we –(Member timed out.)
Silvia Akello (NRM Party MP, Woman Representative, Otuke): Thank you very much, Mr. Speaker. I would like to get some clarification from the chairperson. Recently, I was in Dar es Salaam and I realised those people have introduced a system of revenue where you begin paying taxes when your business has reached a certain amount of money. However, the poor people who sell food on the road and earn Shs 10,000 to Shs 50,000 as profit are not taxed.
However, in our local markets, if you go with your small quantity of beans or millet, you get taxed. My question then is; from which country did you learn this kind of taxation where you even tax Shs 1,000 from a poor person without considering the base of his or her income? (Laughter)
Mr. Speaker, as most people have alluded to, Otuke District is the poorest. At least some districts - you even saw from the report. We are the poorest district. As it is raining now, all the roads are cut off. The only service that we have is this mobile money to take a sick person to the hospital. Now, when you give a person Shs 10,000, they even tax Shs 1,000 out of it. So, are we double, triple or quadruple taxing?
How many times do you want to tax so that we know? It is because I have really failed to understand this type of taxing when you do not know how many times you are supposed to tax a person - (Member timed out.)
Pentagon Kamusiime (NRM Party MP, Butemba County, Kyankwanzi): Thank you very much, Mr. Speaker. It is common knowledge that we need tax so that we can implement Government programmes or offer services. However, as a cattle keeper, I know which cow I should milk?
In this regard, Mr. Speaker, I would like to address myself to two issues. The first one is on mobile money. The committee says they will pick some money as you send or receive mobile money. The committee report says that money has shifted from traditional banks to digital; so, we need to levy tax. In my district Kyankwanzi, there is no bank.
Now when they say money has shifted from banks to digital, let us put a tax, it means, “let us fail them.” They don't have banks and they have gone to mobile money. Mobile money is a new thing here. As they start to exchange money here and there, they say, “Fail them.” What is this? –(Laughter)– In addition to this tax, there is more money that is taxed. If you withdraw Shs 100,000, they charge you about Shs 4,000. They are adding more taxes to cripple them completely.
Another issue on the boda bodas; in my district, apart from the Kampala-Hoima Road, there is no other clear form of vehicle transport inside there. I have been a medical practitioner since 2003; I am involved and I am a good midwife. I have seen mothers giving birth on the way and those who managed to come to health facilities were brought by boda boda. At this particular moment, a new Bajaj is about Shs 4.3 million. When you add something, it will go to Shs 5 million.
Look at the people buying – it means that apart from frustrating efforts of saving mothers who die on the way or who do not have an opportunity to reach the health centres, by increasing this tax, you are going to fail the boda bodas and definitely the whole system. Unemployment will rise and you will have spread doom to this country. We know that we need taxes but we can suggest other possible sustainable ways. (Applause)
Abraham Byandala (NRM Party MP, Katikamu County North, Luweero): Thank you, Mr. Speaker and honourable colleagues. Government does not have a money minting machine but generates money through taxes. At the end of the day, every service needs money. If we don't pay taxes, we are reducing on the services to provide.
Therefore, I appeal to my colleagues that if we want to improve the services offered to our people, we must pay taxes. We must also broaden the number of people that pay taxes. Let us ensure that everybody gets involved in paying taxes.
Members have talked about boda boda cyclists; I want somebody to get out of this House and board a boda boda or a taxi from Clock Tower to Ggaba; the boda boda will charge higher than a taxi. Therefore, colleagues, this question that we are going to get them out of business is not true –(Interruption)
Lugoloobi: Mr. Speaker, thank you for giving way. Previously, people have been paying this tax indirectly. Let us take the example of Otuke where there was no bank; what used to happen in order to transfer money from Otuke was that someone had to travel all the way and the implication of this was that this person boards a taxi, which consumes fuel.
What we are experiencing today, because of these new innovations in mobile money transfer, is that the number of people moving on the road consuming fuel has drastically reduced and that is affecting our tax base very seriously. Therefore, business is shifting from analogue to the digital platforms. As it shifts, the tax man should also equally shift. If we lag behind, this economy is going to collapse.
As we talk, the amount of money needed to service our loans is growing astronomically. Hon. Nankabirwa was talking about the money that we need to service our debts –
Oulanyah: You rose on information.
Lugoloobi: Yes, I am still giving information.
Byandala: Thank you, Mr. Speaker. Therefore, I appeal to my colleagues that all these countries that give us grants and loans are countries whose citizens pay taxes –(Interruption)
James Kakooza (Independent, Kabula County, Lyantonde): Thank you, hon. Byandala. The reality is that even in the developed world, you may be charged for spending an hour. In Ontario Canada, every hour is taxed –(Interjections)– In Uganda, they have started the Express Highway where people will have a choice to either use the old road or pay for using the Express Highway.
This tax is optional; if you want you pay, if you don't want you don't pay. (Applause) That is what is under the law. That is the information I wanted to give.
Atkins Katusabe (FDC Party MP, Bukonjo County West, Kasese): I want to thank you, Mr. Speaker, for the opportunity. I stand here to totally oppose the report because it violates and contradicts all the principles, practice and the structure of taxation.
The projected collection already is Shs 155 billion. Chairperson Committee on Budget, you are fully aware that this country loses up to Shs 600 billion in procurement fraud and corruption alone. (Applause) What does that mean? Shs 155 billion can be got from the Shs 600 billion that we lose to procurement fraud and we will still have a balance of Shs 455 billion.
Therefore, we are losing more to corruption but we want those that are trying to survive – Mr Speaker, I don't want to be part of a House that works so hard to strangle those Ugandans out there that are trying to survive. Thank you very much.
Odonga Otto (FDC Party MP, Aruu County, Pader): Mr. Speaker, I rise on a point of order. My honourable colleague from Kasese just said that this House is attempting to strangle the poor. I am a member of the Committee on Finance and we were advised – (Interjections) -Mr Speaker, protect me from hon. Anywarach. If you transfer Shs 1,000,000, you pay Shs 20,000 to the South Africans.
Today, the Government is just asking for Shs 1,000 and everyone is up in arms; this is lack of patriotism. Is the honourable member in order to mislead the House that this tax which is being introduced to let the Uganda Government also get some money as opposed to giving it all to the South Africans - that we are strangling the peasants and yet we need it to also pay our emoluments?
Oulanyah: Honourable members, the honourable member for Aruu has been dying to give information but nobody has been giving him the opportunity to do so. (Laughter)
Katusabe: Thank you, for the opportunity. If we have a fundamental crisis in our country, it is called corruption. The moment Government takes on corruption squarely; we will have all the money that we need.
I would like to give specific proposals, Mr. Chairman, can you explore the possibility of increasing excise tax from 10 to 18 per cent? –(Member timed out)
Oulanyah: Honourable members, we need to draw this to a close.
Gershom Sizom (FDC Party MP, Bungokho County North, Mbale): Thank you, Mr. Speaker. I rise to oppose the one per cent tax because it targets the poor. I do not need mobile money because I have my ATM card; I am rich and can easily access money compared to the poor people in my constituency.
If you levy a one per cent tax, it will limit the flow of money from the rich to the poor thereby increasing income inequality. This tax is going to make the poor Ugandans poorer.
The Shs 200 is going to compound to billions of money; so, a tax that targets poor people should not be entertained. I suggest that it should be abandoned. I thank you.
Oulanyah: Honourable members, I would like to ask the Leader of the Opposition - so that we can close. It has been a long debate.
Winfred Kiiza (FDC Party MP, Leader of the Opposition): Thank you, Mr. Speaker, for giving me this opportunity. I know very well that the country needs money and it is our desire as the people's leaders to ensure that we give the population the best.
We need services, we need healthcare, we need improvement of agriculture, we need infrastructure but how do we get the money to lead us to where we would like to go? We need taxes but from whom?
Time and again, the issue of tax exemption for those who are supposed to pay the real tax that would redeem us from poverty has been coming up here.
Mr. Speaker, just the other day, the Minister of Finance, Planning and Economic Development was asking this House to exempt big corporations from paying corporate tax, which is money on profit.
I would imagine that these telecommunication companies that are enabling our poor people to access services through mobile money transfers earn profits, which would be used for corporation tax. However, the minister of Finance was asking us to exempt them.
Members talked about the banking sector collapsing. The Uganda National Bureau of Standards put the banking sector in the country at Shs 5 million out of the 34.5 million Ugandans. The rest of the population depends entirely on accessing money through mobile money. In my district, for example –(Interruption)
Cecilia Ogwal (FDC Party MP, Woman Representative, Dokolo): Thank you, Leader of the Opposition, for giving way. I would like to inform you that one of the ways of capturing the resources of the country and making us pay more taxes is by opening up the population to formalized institutionalized savings and transactions.
If you care to read history, one of the reasons the UPC Government opened branches of Uganda Commercial Bank at sub county level was to take banking services nearer to the people and that is the only way that you can know how cash transactions are being handled.
It is the only way of building a culture of using a formalized institution and a sharp Government would notice the liquidity of the country and how we can manage to mop out where the cash is more than what we need in the economy.
Mr. Speaker, I would like to inform the Leader of the Opposition that if this is a caring Government that knows that we were very hurt when the UPC banking system - the Uganda Commercial Bank - was closed –(Interjections)– it is on the Hansard that the Government promised to bring a system that would replace the rural branches; it has never happened. They promised to come through Postbank but it has never been done.
We thank God for this mobile money system; now when I want to send money to my oldest auntie in Oyam or Kisoro, I use mobile money. Would a normal Government deny this rural woman who does not even know where the bank is and how to take photographs, open an account and be recommended to access cash to transact business by using mobile money –
Oulayah: You rose on a point of information.
Kiiza: Thank you, hon. Ogwal, for that information. Mr. Speaker, when we go to hon. James Kakooza's side that people are now travelling less and therefore, we are making less money from the would be travellers, we would be thanking God.
The state of our roads is not good and exposing many of our people to accidents is more disastrous than making the taxes. Mr. Speaker, look at a situation where an old woman or man who is receiving the social security fund is supposed to travel a distance that will require the member to pay Shs 10,000 as transport but he is going to collect Shs 26,000. The bank will also take some charge - we are just missing the point.
There is money that we can get from so many Ugandans whom we are exempting. Let us increase taxes for example on tobacco consumption because after all it is written that taking tobacco kills. Let us tax alcohol. Can we levy more taxes on sachet gin, so that our youth can become more productive? We are in a country where more than 70 per cent of our youth are unemployed; a country where the boda boda industry employs more of our young people. By taxing the boda bodas, we are telling these young people to go back to the streets without jobs and then we shall start crying about butayimbwa wielding people who are killing Ugandans. What message are we sending to these young people?
Secondly, we are in a country where many of the people who receive money through mobile money services are the old women. They receive little funds from their working children. They just depend on transfer earnings from relatives. Do you want to chop even the little that would be sent to such a person? We are just being unfair to our population when society has actually been unfair to them. Therefore, talking about an issue –(Interruption)
Kakooza: Mr. Speaker, I think we need to know the concept of this Bill and understand its intention. The Leader of the Opposition has said that it is targeting old women but it is not targeting anybody. Rather, according to the Bill, you have a choice on what you want to use. You either choose analogue or digital.
Oulanyah: Honorable member, you rose on a point of order.
Kakooza: Is the honorable Leader of the Opposition in order to mislead the House by saying that the Bill is targeting old women whereas it seeks to provide a choice on where you want to go?
Oulanyah: Unfortunately, I am unable to rule on that point of order because I have not understood it. (Laughter)
Kiiza: Thank you, Mr. Speaker. I thought the House would not be misled after I had said that the Uganda Bureau of Standards, after the census, said that only five million Ugandans are exposed to the banking sector. Therefore, there is no question of choice here but the choice left for the poor people in the villages is mobile money.
As I wind up –(Interjection)– I know your information is important, honorable colleague, but the Speaker is telling me to wind up. We are also talking about levying a tax on cooking oil. The majority of the people who are in the cooking oil business are the women. I do not know where this country wants to put the woman of Uganda. Right now, women at the border points of Rubiriha-Mpondwe, Busia and other border points are in one way or the other trading in oil.
However, even before this tax is introduced, I can tell you that my own women have been subjected to some form of tax on the crude oil coming from Congo. I do not know whether you introduced the tax before the law was made but after getting the money from them, you want to bring the law. I can tell you how these women, from time to time, are crying and spending reasonable time in jail under the Uganda Revenue authority (URA). My issue is, would we need –(Interruption)
Ogwal: Mr. Speaker, I rise on a point of order. The Leader of the Opposition is emphasising that taxing oil would disadvantage women but it is the other way round. If the women do not use cooking oil for their husbands, many of them are going to be divorced. Therefore, the men are the ones who are going to benefit most and I would expect the men in this House to support the idea that oil should not be taxed. This is because if the women do not cook well, then we are in trouble.
Therefore, is it in order for the Leader of the Opposition to continue saying that taxing oil would disadvantage women when it is actually the men who would be disadvantaged? (Laughter)
Oulanyah: Leader of the opposition, you have heard that clarification. (Laughter)
Kiiza: Mr. Speaker, I appreciate hon. Ogwal for the comments. By the way, what I can say is that gone are the days when women used to sit at home and wait for their husbands to bring all the necessities of life. Lately, there is mutual cooperation between husband and wife. In many of our families, it is now the women who are meeting the burden of taking care of their husbands. Therefore, for the men to say the oil should be taxed is to say that women should struggle more to make money and make the men healthy.
We want to cook very good food for our husbands and we even want to participate in this trade, but we would not want it to be so stressing for the women who are involved in this business. Therefore, I would like to request that for the good of this country, the motion be withdrawn in order to ensure that there are no income inequalities between the rich and the poor. Also, to ensure that the poor are supported - our young people are helped to be employed in some way or the other through the boda boda business.
Oulanyah: Who is going to respond to this? Is it the chairperson or the minister?
Henry Musasizi (Chairperson, Committer on Finance, Planning and Economic Development): Thank you, Mr. Speaker. I would like to respond to a few issues and concerns raised by the Members. First of all, on the argument that some companies have been exempted from corporation tax and therefore the poor people should not feel the pinch of some taxes, I would like to put this on record that there are many ways companies grow. Some companies grow internally by ploughing back the profits, others by borrowing and others grow by acquisition and mergers. Therefore, it is not that when an exemption for corporation tax is given, it is a wasteful decision. It depends on the intention and the purpose upon which this exemption is given.
Secondly, the Financial Inclusion Strategy, which was launched about six months ago, included banks, mobile money operations, agency banking, the insurance sector, SACCOs among others. It is true that mobile money has helped in terms of extending financial services to the ordinary people of Uganda. However, we also have to look at the other side. The ordinary people want roads, medical care and education. These people would like Government to help them come out of poverty. What solution does Government have? The only source through which Government can raise money to facilitate social services provision is through taxation.
Mr. Speaker, a few days ago, we debated ministerial policy statements and every sector that came here prayed for a budget increment. However, when you look at their unfunded priority lists, it is amazing. How can this be financed? It can only be financed through taxation.
Mr. Speaker, repeatedly, we have argued on the Floor of this House that the tax to GDP ratio of our country is very low compared to other countries in the region – actually, it is the lowest in the region. In addition, Government has a target to increase this tax to GDP ratio in the medium term - actually by 2020 - from 14 per cent to 20 per cent. This can only be achieved if we embrace the idea of levying taxes across the board without being specific on mobile money.
On the issue of boda bodas, currently at registration, there is a tax charge of Shs 100,000. The proposal in the Bill is seeking to raise this to Shs 200,000 –(Interjection)– Yes, these are facts. The justification is to raise revenue; I wonder what is wrong with such a proposal. We must really come out of the box and think in terms of developing this country together.
Lastly, on the debate between taxation and corruption, there is a different relationship between these two. I know there has been concern on the side of corruption, which is glaring, and we all agree on that aspect. However, do we stop taxation simply because money is being used for a different purpose? My answer would be no. Let us raise the –(Interruption)
Anywarach: Mr. Speaker, the honourable chairperson is proceeding as if this House is against taxation and Ugandans are against taxation and yet this House is only raising issues on itemised taxation. We are talking of mobile money transactions, excise duty on WhatsApp and boda bodas.
Mr. Speaker, is the Member in order to impute wrong motives on Parliament that we are against taxation, which gets the money to sustain economic development, infrastructure development and so on?
Oulanyah: Honourable member, any suggestion to the effect that this Parliament does not want to raise revenue for this country would be false. We have passed many tax Bills already and we are about to pass more. Please, stick to the debate; it helps.
Musasizi: Thank you, Mr. Speaker, for your wise ruling. Lastly, I would like to comment about the cooking oil tax proposal of Shs 200 per litre. Cooking oil, like hon. Cecilia Ogwal said, is not only for women. This is oil used for cooking for both men and women. We think the imposition of a tax of Shs 200 per litre can help us generate revenue. That is the intention. Therefore, I would like to invite Members to look at this from that aspect. Thank you, Mr Speaker.
Ogwal: Mr. Speaker, is it in order for the honourable chairperson to misquote me by saying that I recommended that oil is not only an advantage to women but also to men? The idea is that if there is anyone to ensure that oil is not taxed, it is the man because he is the greatest beneficiary –(Interjection)
Mr. Chairman, can you listen to what I am saying. The men, including you, are the greatest beneficiaries of the use of oil in the home. Therefore, is it in order for you to misquote me or to read my mind wrongly and to misunderstand my statement, which I made very loud and clear?
Oulanyah: Honourable members, there is no rule against misunderstanding. (Laughter)
Katali: Thank you, Mr. Speaker. I believe my chair has ably answered some of the things –(Ms Naggayi rose_)
Oulanyah: The honourable member has not even said a word; now what are you seeking clarification for? Please, she has not said anything yet.
Nabilah Naggay (FDC Party MP, Woman Representative, Kampala): I seek clarification before the chairperson sits down.
Oulanyah: But he is not holding the Floor. You cannot seek clarification when the Member is not holding Floor. Wait for this one to make the same statement then you can seek clarification.
Katali: Thank you, Mr. Speaker, for your guidance. I think my chairperson has ably answered most of the things. I will go straight to what the Leader of the Opposition (LOP) said about cooking oil. Mr Speaker, when we bring loan request to this Parliament and we talk about procurement, Members complain that we are not promoting local content.
The LOP talked about cooking oil at the borders and she clearly stated that that oil comes from DR Congo. Mr. Speaker, we are trying to promote local content - the producers of oil in this country. Those ladies should be selling oil that is manufactured in Uganda –(Interruption)
Okupa: Mr Speaker, I would like to get clarification from the vice-chairperson of the committee. Can you clarify to me whether the tax imposed on cooking oil is on the locally produced oil or both?
Musasizi: Mr. Speaker, I would like to respond to hon. Okupa's concern. The Bill we are considering is the Excise Duty (Amendment) Bill and this Bill deals with locally produced products. If we were talking about imports, we would talk about import duty but this Bill largely focuses on imported goods –(Interruption)
Okupa: Mr. Chairperson, I do not want us to confuse the public by saying that excise duty is only on local goods; it is also levied on imported goods. I enjoyed the privilege of working with the Uganda Revenue Authority and therefore, I know these things.
Katali: Mr. Speaker, I beg to lay on the Table the original copy of the report and the minutes from the different meetings that we held with the different stakeholders.
Oulanyah: Let the records capture the minutes and the copy of the report.
Bahati: Thank you, Mr. Speaker and honourable colleagues, for the contributions that you have made on this important Bill. It is important and I know many know that tax is a contribution and not a punishment. We should all understand that. Most of these measures that we have proposed to the House contribute, for this financial year, close to Shs 1 trillion.
As the chairperson said, our tax to Gross Domestic Product is now at 14 per cent. Norway is at over 50 per cent. Rwanda here across, which we sometimes talk about, is at 18 per cent. Therefore, the burden of taxation in Uganda is the lowest in the region. Most of these taxes that we have proposed, we have thought about them, we have posted them, we have measured them and we have –(Interruption)
Naggayi: Mr. Speaker, we are talking about taxes that are specifically targeting a population that does not earn much out of that business. I would like to seek clarification on the charges that these telecoms have. If they charge Shs 20,000 to send Shs 1,000,000, how much tax is on that transaction? I see that we are looking for softer targets.
Right now, we are saying if the banks were paying taxes and now the telecoms have replaced that traditional system, how much is Government getting and expecting out of every transaction?
Bahati: Currently, we have been charging 10 per cent. If you are transacting and you are charged Shs 10,000 for transfer, Government gets 10 per cent. Therefore, we have increased it to 15 per cent.
Honourable colleagues, I would like us to understand this. When imposing a tax, you must measure all factors. You can say, for example, that you are going to increase tax for a company but eventually the company indirectly translates it to the customer, and that is what happens. Friends, all these tax measures – (Interruption)
Akello: Thank you very much, honourable minister, for giving way. In most cases, people who deal in mobile money services, where we are getting the taxes, are being robbed and some of them are even killed. What are the avenues that we are giving them for security and even against conmen? What are we doing to protect what we are looking for as a source of our revenue collection?
Bahati: Thank you. We have considered many factors in this tax measure. At the end of the day, we want to raise revenue in a way that will not hurt the population of Uganda. We want to raise revenue to be able to finance the budgets and services we are really advocating for.
You are talking about the poor and we know; that is why in the proposal to tax mobile money, we could not suggest a tax of 2 per cent or 10 per cent; we know that. We know that this poor person you are talking about is getting free health care –(Interruption)
Odonga: Thank you so much, honorable minister. According to Bank of Uganda records, the volume of mobile money transactions in Uganda is worth Shs 19 trillion in a financial year. As of now, Government is getting only Shs 45 billion in taxes. Therefore, this small increase would make Government get Shs 115 billion.
I would propose that we increase the tax not only from 10 to 15 per cent but from 10 to 30 per cent. The information, I am giving the honorable minister is that monies have fled from the commercial banks where Government could get taxes and they have ended up in mobile money services, which seems to have more money than commercial banks. Therefore, it is the right avenue to get this money which we are unable to get through the banks.
Bahati: If I can make one point, because I know if I do not make it then people will continue confusing the situation. Adding onto what hon. Odonga Otto has said, the transactions alone of mobile money now stand at Shs 60 trillion in a country whose GDP is worth Shs 100 trillion. However, how much are we getting from this?
Remember, most of these people who are involved in mobile money transactions are not taxed anywhere else. That is where they interact with the economy; they are in the informal sector and you can never find them. They want health care, free education, peace, water and all these good things. The appetite for good services must be backed by measures to support them.
Oulanyah: Honorable members, the one thing that I will not tolerate is dignified Members of Parliament standing up and yelling as if they do not know what to do? I cannot sit here and watch you do this. Please, let us respect this House.
There is no point in 15 Members all yelling, “Order”. No, it does not make sense. Let one person raise the point of order - It does not justify what I am seeing. Please, let us exercise some decency in this House?
Bahati: I would like to thank hon. Cecilia Ogwal for the point she has raised about cooking oil. I wanted to inform hon. Cecilia Ogwal that most of these companies which are manufacturing cooking oil are actually getting exemptions for their materials.
There are also other factors. Well, I know you have glorified cooking oil but I know that if you look at it from the health perspective, they also have issues. You cannot stand to glorify cooking oil as if it is something that – There are also other factors.
Joy Atim (UPC Party MP, Woman Representative, Lira): Thank you very much, Mr. Speaker. I would like to thank the honourable minister for his statement about oil, in which he talks about charging tax and reducing on health issues. However, I want to assure the minister that cigarettes and alcohol in sachets are also hazardous to the community of this country but he has not taxed them.
Did you know that the majority of the population in this country is women? These women are now fending for their families, but you are taking this tax burden to them, especially those women in the rural areas. The women in the rural areas are the ones fending for the family. The men have given up; they are not supporting their families. Do you know that you are now taxing the woman who is already poor in this case?
Okupa: Thank you. You are talking about the cooking oil; I posed a question to the leadership of the committee but I did not get a response. Can you now clarify to me the excise duty on cooking oil? Is it for both the imported and locally produced cooking oil?
On the issue of mobile money, we have been asking if we could have a law to regulate the mobile money business but you have failed to bring it. Is there a risk that after imposing this tax, someone will take us to court because there is no law to regulate mobile money?
Robert Kyagulanyi (Independent MP, Kyadondo East, Wakiso): Thank you very much, honourable minister. I appreciate the fact that you mentioned that taxation is a duty and not a punishment. Allow me to inform you that over taxation is not only punishment but oppression.
Where I come from, mobile money is not just a business but a livelihood. Due to insecurity, people depend mainly on mobile money. I will give an example of a fairly decent Ugandan who earns Shs 1 million and they spend all that money through mobile money. If the taxation was levied once, we would not argue so much about it but since it is mobile money, it is charged on every transaction, received or sent. That means if that person receives that money, they are being taxed on their salary; when they pay for their children's fees, they get taxed; and they continue to be taxed at every level, which I believe is oppression. At the end of the day, honourable minister, you realise that life is actually being taxed. Somebody is being taxed multiple times.
I am not going to raise an argument on the cooking oil or the motorcycles but I would like to suggest that we indeed drop this taxation idea. Thank you very much, Mr. Speaker.
Bahati: Colleagues, I must wind up; I will not give way unless it is a point of order.
The other question, which hon. Joy Atim raised, was the issue of cigarettes and spirits. We are taxing them. If you look at the Bill, you will realise that we are taxing them and they attract one of the highest taxes. Look at undenatured spirits made from locally produced raw materials; we are taxing them 60 per cent.
We must differentiate between taxation and banning. If you do not want a product, you can ban it, and you have the powers to do so. However, if you are talking about taxation, you must balance it in such a way that the company stays in business. Otherwise, if you want to tax it to the bone marrow, then you would rather ban it. That is the choice we have to make.
Mr. Speaker, these tax measures have been evaluated. They have taken into consideration the poor and their requirements. (Interruption)
Akena: In the debate, the arithmetic was totally wrong. When we brought up the issue of the elderly receiving Shs 26,000, I think one person said that the taxes would be Shs 260, and that is only for receiving. If they withdraw, there is another tax of one per cent. If they send it, there is another tax. Therefore, the minimum is going to be Shs 540 to receive Shs 26,000.
Honourable minister, you say that it is people outside of the economy, but it is the Government's choice to go for indirect taxes. Anybody who spends even one shilling in Uganda is being taxed, whether you buy salt or pay a taxi fare. Everything is being taxed indirectly. It is by choice that graduated taxes were removed and other taxes, which have direct accountability.
However, on the issue of mobile money, I do not think you are being honest with us because the minimum is going to be double taxation, for receiving and withdrawing. The object of the Bill says to receive and to withdraw; that would take two per cent immediately.
Bahati: We can debate these measures but it is important that we debate them after receiving this information. The resources that we use to finance the budget come mainly from three sources. One of them is revenue mobilisation, the second is borrowing. We have had requests to do with borrowing on the Floor of the House. However, even when you borrow, you must use domestically generated revenue to pay the principal and the interest.
Therefore, when we charge something small for the mobile money business and the boda bodas – There are issue