Taxes, family finance and you

Taxes, family finance and you

I come from Munteme village, Hoima district. In the early 1990’s, Munteme was like a ghost town. Old buildings with leaking roofs that had been left behind by the Indians following President Idd Amin’s mass expulsion of Ugandan Asians. With oil discovery in Hoima, a new sugar processing plant in Munteme village and the upgrading of Hoima-Kagadi road, the village is transforming rapidly.  And thanks to government’s approval of Kikuube district in 2015, a total budget of Ugx. 16.5billion has been approved in the 2018/19 budget to operationalize the district. This has attracted many people to the real “oil district”. Immigrants from the south-west especially Kigezi have bought large farmlands having sold their small plots back home.  You know what happens when many people including speculators want land which is limited in supply.

Once a village, Munteme is now a County of sorts. Locals are selling their land, buying boda-bodas and starting small shops. Farming is slowly dying. And to survive, us in Kampala must support them “our parents and relatives” in the village. WhatsApp chats and Facebook have fully replaced phone calls and SMSs.  My parents and sisters record the evening meal, prayer time and share on WhatsApp. They then ask for mobile money, so they may send the message the following day. Cheap prices of smart phones have simplified communication. I speak to them on Skype easily. I can send mobile money. And as an Accountant, instead of travelling four times a year as I used to in 2014, thereby spend over Ugx. 600,000 per trip in fuel and car repairs, excluding time on the way, I travel once for Christmas and send them half or thereabout of the trip money saved which helps pay fees, plant crops and fix medical issues since we don’t yet have universal health insurance.

Now the taxes that come into effect on 1st July 2018 portend to disrupt this lifestyle. Mobile money and Over The Top (OTT) services like WhatsApp, Facebook, Twitter, LinkedIn, Skype and other similar “Lugambo” or social networking services will be taxed. MTN, Uganda’s leading telecom provider has issued a public notice thus “Effective 1st July 2018, OTT services can be accessed upon payment of the OTT tax by the customer.” The taxes are (1) Ugx. 200 per day; or (2) Ugx 1,400 weekly or (3) Ugx. 6,000 monthly. Assuming 60% of the 20 million Ugandans use OTT services, government will generate Ugx. 864bn.

Taxes are one of the tools government uses to provide “signals” of what is a desired or not. When government wants to promote something, it does not tax it altogether. To discourage the use or consumption of any product or service, government introduces or increases its taxes.

The fact is there has been increase in the abuse of social media by some members of the public. Many companies today lose billions of shillings daily by staff wasting a lot of time on their own smart phones (companies usually block OTT services access during working hours) chatting on their WhatsApp groups or checking out gossip.  Married couples sleeping in the same bed chat and smile to strangers; only to turn a dull face to their partner! Other the other will turn to show a joke, by some nice looking other “woman” or “man”. At bed time, such could be a turnoff. This has killed trust and communication among families and generally increased promiscuity and divorce rates among millennial couples.

Specifically, Facebook and WhatsApp are the most used OTT services and the most abused. Because mobile modems have dynamic internet protocol addresses, many criminals use the social network to impersonate known leaders or prominent people. Post insulting content about others hiding behind anonymity guaranteed by the social network provider like Facebook. In the end, people have lost freedom, reputation and credibility and many a politician have lost money the recent case in the news being the Minister of Finance, Hon. Matia Kasaija, whose profile was impersonated, and messages sent to the general-public to help send him money. Of course, the fraudster, got the money!

Many people see WhatsApp and Facebook as oxygen. They cannot eat or pray or work before they check for any news. It is so bad and disgusting that even during the Sunday Mass “people check on their WhatsApp!” Some people prefer to load data at expense of buying food for home.

The new taxes by government are a “signal” to people to stop wasting too much time. However good a new tax, it comes at a cost of good things. Particularly, taxing mobile money may not have been timely. The signal being given is bad. Ugandans need financial inclusion. And mobile banking had closed the void. Tighten your belts. Identify your critical needs. Set priorities and budget well. Don’t pay that tax before you put food on the table. May be now children may have time with their parents.

 

 

About M. B. Mugisa

Mustapha Barnabas Mugisa is one of those rare people who provides business consulting and advisory to professionals and corporate entities who demand the very best. He is a prolific speaker and governance (strategy and risk) expert. His speaking involves making key notes at major conferences and business events on both technical subjects and leadership skills. A change agent and motivational speaker. Mustapha provides tools and proven methodologies to remarkable results through making people appreciate change. Visit Mustapha's LinkedIn profile to know more. Mustapha is the architect of #WinningMindset Leadership and #WinningTheGame strategy approach that combines Harvard Business strategy Playing To Win, with the Blue Ocean Strategy and Balanced Score Card to deliver a strategy that is easy to execute and monitor. Visit www.mustaphamugisa.com for special insights to improve your condition. Are you too good to be great?

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