Uganda's government is imposing a de minimis tax on mobile money to make a point that they have the power to impose such taxes and more if they wish to. Besides, the country is in dire need of more tax revenues amid glaring deficiencies to combat corruption, profligate expenses, and waste.
While everybody now seems to ponder why the recent tax proposals are targeting the already taxed, and most importantly the poor, perhaps history can offer us some rationale — and foresight.
Britain in Uganda
The mark of Britain’s hegemony and imperialism to the ordinary Ugandan was probably felt upon subjection to compulsory payment of taxes. The British, from the turn of the 20th century, propagated a system that extracted rent more than it added value. This was well administered through allies and feudal lords, who, despite a certain level of autonomy and status, were integrated as a lower rung of the colonial administration.
Britain had found it convenient and cheap to rely on local power brokers in Uganda — which it recognized and strengthened with new powers — to keep order and carry out some basic government functions. This also fitted the rhetoric of the protectorate status and indirect rule.
From 1908 to the 1920s, the colonial administration formally worked out laws and modalities to extort rent and taxes from the sweat of Uganda's natives tilling their land and also poorly compensated indentured classes. At this time, uncooperative populations were stealthily wiped away in tens of thousands (you won’t find this in history books).
Tax and anarchy
Uganda’s most renowned example of anarchy fomented by unfair taxation is possibly the political ferment and uncertainty in 1960 in Bukedi (Eastern Uganda). In addition, the disturbances were exacerbated by the rising political activism towards Uganda’s independence (1962) and the waves of crime at the time.
"Taxation was the ostensible reason for the rioting (in Bukedi District), but more fundamental was the feeling that chiefs should not act simultaneously as tax collectors, controllers of the police called upon to arrest defaulters and as judges at their subsequent trial," - Kenneth Ingram, Obote: a Political Biography, page 57.
Some skeptics have alluded to the unfounded mobile money tax decision to corporatocracy — and state capture. The 1% levy on all mobile money transactions; “on receiving, payments and withdrawals” on top of a 15% charge by Mobile Network Operators on mobile money, is widely seen as a move by banks to stifle mobile money with the hope that in return the supposed efficacy of banking will be realized by the populace.
Already, Ugandans on a per capita basis pay five times more mobile money fees than their Kenyan counterparts (Uganda ramped up $10 billion in mobile money transactions in 2015 as compared to Kenya’s $28 billion in the same period).
The government, on the other hand, has said that "there is a need to replace what has hitherto been the default method of payments for low income holders."
"A move by banks to stifle mobile money with the hope that in return the supposed efficacy of banking will be realized by the populace."
The glut of tiny aluminium kiosks dotting all possible accessible locations, mirabile dictu, probably signal that mobile money is doing well, yet this is not exactly the case. The economy is at a crossroads. Uganda’s founding fathers would hit back with atavistic rage if they found out that mobile money, just like land in the early 20th century, is going to be taxed left, right, centre. Thanks to a rung of administrators who care for the wellbeing of the state and its head sans the wellbeing of the citizenry.
Granted, the recent raft of tax proposals — notwithstanding the mobile money tax, and bar Uganda’s history with unfair taxation — are also related to the Tea Act of 1773 in the United States of America. What started as a move by the British to protect their economic interests by levying impossible and criminally high taxes to mitigate smuggled Dutch tea, in favour of British produced tea, culminated into the American revolution and national independence.
It is documented that middle-class Americans, most of whom had never been to a political protest and never expected to join one, did the unexpected and walked the streets in protest and civil disobedience.
When the one per cent tax is levied against the 99%, the raw unchecked power comes under crosshairs.
Cover image credit: iAfrikan Digital
This article was first published on Daniel Mwesigwa's blog in April 2018 and has been edited and adapted for publishing on iAfrikan.