Kampala. A fresh controversy has emerged over how the rate of a proposed excise duty on Mobile Money transactions was secretly doubled in law to 1 per cent, sparking a nationwide chaos and slowing businesses.
The impugned rate, which President Museveni on Wednesday said should have been 0.5 per cent, has raised questions about the internal workings of government and concentration of officials and legislators to scrutinise official documents and draft legislation requiring attention to detail.
Members of Parliament passed the Excise Duty (Amendment) Bill, 2018, by voice voting on May 30, introducing, among other taxes, multiple 1 per cent excise duty on Mobile Money transactions — deposit, transfer, withdrawal and payment — and Shs200 per-day social media tax.
“This is to clarify that there is no tax on mere depositing money on a mobile phone account. That confusion should be clarified. The half -per cent tax, not 1 per cent, is only on the sender and the receiver of money through Mobile Money,” President Museveni noted in a statement on Wednesday.
Days after Parliament enacted the Excise Duty (Amendment) Bill, 2018, Finance minister Matia Kasaija disclosed publicly that Cabinet had agreed on 0.5 per cent as the rate and that one of his colleagues, whom he did not name, took advantage of his travel abroad to alter the figure.
The State Minister of Finance for Planning, Mr David Bahati, was an understudy at the time Mr Kasaija travelled to South Korea, and he presented the Bill for the First Reading on April 3, 2018 and later defended it when MPs debated and enacted the law on May 30.
We were unable to reach Mr Bahati, whose mobile phones were switched off and who was out of office when this newspaper visted yesterday, for an explanation on how and at what stage the figures changed.
“I am not aware that Parliament has approved 1 per cent tax on Mobile Money. I apologise for that because it contradicts what we agreed on in Cabinet. What we agreed on was a half of one per cent. I will ask the responsible officer how 1 per cent tax on Mobile Money was approved,” Mr Kasaija said early last month.
He promised to take up the matter up with the President, who by law is technically the Minister of Finance, but no adjustment was made until implementation of the tax triggered a backlash that has beaten the government to retreat.
Mr Jacob Oulanyah, the deputy Speaker of Parliament, who chaired the May 30 session, told this newspaper yesterday that they only processed figures as submitted by the Finance ministry.
“Check the original Bills to see where the problem came from; it will give you a clear picture of where the figures came from,” he said.
The ministry’s Permanent Secretary, Mr Keith Muhakanizi, did not answer our repeated telephone calls, but one source familiar with the internal discussions said a “head may roll” over the politically-costly error that has also embarrassed government.
According to the Hansard, Parliament’s Finance committee vice chairperson Loy Katali reported to the whole House that “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, Ms Katali argued, adding that 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,” she said.
Twenty-eight out of 38 MPs who spoke on the tax proposal opposed it, but it passed when the consolidated Excise Duty (Amendment) Bill, 2018, which contained other tax provisions and exemptions, was put to voice voting.
Mr Ignatius Wamakuyu, the vice chairperson of House Budget committee, said Finance must take responsibility for the wrong figures.
“The original draft Bill brought to us indicated one per cent tax on mobile money. At Parliament, we had discussions on its affordability and we thought it should be brought down to 0.5 per cent. However, on the day of passing the Bill, when the (deputy) Speaker posed a question on whether it should remain one per cent, or be reduced, no one rose to challenge the one per cent and that’s how we passed it.”