July 1st 2018 proved to be a turning point for social media users and over-the-top (OTT) service consumers in Uganda, following the implementation of the infamous OTT tax. Many of these found themselves instantly blocked from accessing WhatsApp, Facebook, Twitter, LinkedIn and even smartphone browsers.
Telecoms had – prior to this – shared a directive from the Government on the tax, suggesting payment of UGX 200 (~0.05 USD) for every user per day of access, with expiry at 11:59pm. Other alternatives were UGX 1,400 per week, or UGX 6,000 per month. The payment was to be effected through mobile money, which was also taxed resulting from the mobile money tax imposed.
The public was divided into three sections: One which opted to quit these services for good, the second which chose to adhere to the duty and have been paying the tax to access, while a defiant section resorted to using VPNs to keep access.
The months that followed were intense, involving city riots and demonstrations, Presidential addresses, and finger pointing on who was responsible for the taxes imposed; but all this focused more on the mobile money tax.
The President, for instance, stated that the mobile money tax was signed in error – directing that it had to be 0.5% on withdraws, rather than the implemented 1% on all transactions. He, however, had no kind words for the OTT tax.
“As to social- media tax, all the moral reasons are in favour of that tax. The social – media users have no right to squander the dollars I earn from my coffee , my milk etc by endlessly donating money to foreign telephone companies through chatting or even lying and, then, they are allergic to even a modest contribution to their country whose collective wealth they are misusing,” he wrote in a Facebook post.
This was re-echoed by Government officials and other pro-OTT tax revellers who suggested that they were in support of the tax because it was to boost the nation’s revenue collected in taxes, and thus increase on service provision. Despite pressure from politicians, activists, and concerned persons, the stand has not changed.
On November 1st 2018, four months after effect, telecoms announced that they had extended the validity of the OTT tax from midnight to 24 hours, a point to prove that the tax is here to stay.
So, is the OTT Tax of any use or not?
Let’s first look at the positive in this. For any nation to develop, citizens should play the bigger role, especially in regards to revenue contribution. Ugandans can indeed pile up a huge sum of money in taxes if every social media/OTT user paid for access to the services.
But what lies in between the contribution, and the nation’s development is the use of the money collected. Many would argue that it won’t be put to proper use, and they would rather keep it to themselves than giving it to the government.
On to the negative: A section of activists will strongly argue that the OTT tax is a violation of the freedom of speech, and they are right. Instead of taxing the companies that started up these services, the government is charging the end-user who is just utilizing the little right accorded to them.
Well, the debate is wide, and open to discussion. Do you think the OTT tax is beneficial after all?
