Govt to assess OTT impact & its failures

MPs on the ICT committee have directed the ministry to furnish Parliament with an assessment report on the impact of social media tax on the consumption of ICT services and products in the country. According to the committee, chaired by Tororo North (county MP) Annet Nyaketcho, social media tax has greatly reduced internet usage in the country.

Last week, the ICT ministry, led by its chief, Frank Tumwebaze, appeared before the committee, currently scrutinising the national budget framework paper for the financial year 2019/2020, to share their views on the same.

During the meeting, members reportedly demanded to know if there were adequate consultations between ICT and the finance ministry on the likely impact of the tax, commonly known as Over The Top (OTT) services, before it was introduced.

When contacted on Saturday, Tumwebaze said:

 “Taxation is not our mandate as a ministry. Taxes are proposed by finance ministry, discussed by Cabinet and finally passed by Parliament.”

He noted that even before Parliament asked them to carry out an impact assessment report on OTT, the ICT ministry had already embarked on the same.

“We need to know the right tax policy so as not to stifle innovations. However, no tax at all is not wise either, because the same ICT sector requires more and more funding to support innovators and scale up broadband infrastructural development for universal connectivity,” he said.

Tumwebaze said upon conclusion of the assessment exercise, the ministry would issue a report to finance and Parliament about the findings. In May last year, Parliament passed legislation that introduced a tax on social media platforms, such as Facebook, twitter and Whatsapp.

Under this arrangement, users are required to pay sh200 daily to access any of the OTT platforms. Nyaketcho said the Government did not carry out thorough consultations before the tax was introduced.

“We want to know whether consultations were made before the finance ministry came up with the tax. As a committee, we were not consulted,” Nyaketcho said.

Upon its introduction, the Government defended the tax as one of the avenues for government to raise revenue. One month after its introduction, Uganda Revenue Authority reported that it had collected sh4.7b from the social media tax and sh22.3b from mobile money transactions. The taxes were part of the new measures that came into effect at the beginning of the 2018-2019 financial year.