Private sector players under their umbrella body, Private Sector Foundation- Uganda (PSFU) have asked government to completely scrap off tax on Mobile Money (MM) withdrawals and cut on luxurious expenditures that result into ridiculous tax proposals.
Appearing before the Finance Committee of Parliament on Tuesday to submit their views on the Excise Duty Amendment Bill (No.2) where Government is proposing to reduce the tax on mobile money from 1% to 0.5% on only mobile money withdrawals, private sector players led by PSFU Executive Director, Gideon Badagawa, argued that even the 0.5% will still stifle their businesses.
They argued that people have literally rejected the tax since it came into force on July 1, 2018, with mobile money turnover h reducing by 60% in the first two weeks of its implementation.
“If what is driving the 0.5% is the expenditure that we put in the budget, then it is better to go back and look at the luxurious expenditures. It is true we are spending luxuriously in this economy, we can point that those areas that we can cut down so that we don’t constrain employments and jobs,” Badagawa argued.
In their proposal, PSFU has recommended to have the 0.5% tax on mobile money withdrawals totally scrapped off but instead have excise duty paid by Telecoms raised from 15% to 17.5%.
In the recent Excise Duty amendments, Excise Duty was increased from 10% to 15%.
However, some MPs like Henry Musasizi, Chairperson Finance Committee warned that scrapping off the 0.5% would cause a deficit in the budget.
Bank of Uganda officials also recently called for the scrapping of the infamous tax. BoU said Mobile Money truncations declined by Shs672bn in the first two weeks of July 2018.