An online report released the other week by the government telecom regulator, Uganda Communication Commission (UCC), indicated that people who paid over the top tax commonly known by its acronym, OTT reduced from 8.04 million in July 2018 to 6.84 million at the end of September 2018, revenue from OTT reduced from UGX 5.6 billion in July to UGX 3.9 billion and internet subscribers reduced from 16 million to 13.5 million.
The analysis which has dealt a devastating blow to the government’s logic on the essence of the tax – revenue enhancement only reinforced the already existing evidence that the tax was bad for business, both on the government and citizens’ side.
It’s with no doubt that the tax should be repealed because no good has come from it so far according to the report. Previously, the government seemed certain of its revenue, State Minister of Finance, Planning, Hon. Bahati at a press conference revealed that the government had gained UGX 7 billion, (UGX 2 billion from OTT) and the “idea of removing it would not be entertained.
However, in just one quarter (July to September 2018) after the Act commenced, a 29% decline in OTT revenue was declared, in addition to reduced internet usage and increased VPN users. The tax simply does not meet the basic conditions of a good tax in regard to fairness, adequacy, simplicity, transparency, and administrative ease and thus needs to be done away with. Now given the damning evidence against the OTT, which may worsen as small victories tend to embolden the victors, in our case the users who evade the tax using VPN, will government backtrack its previous stance?
Do we sometimes wonder why the tax on mobile money was hastily reversed and not the OTT? One explanation from a political economy perspective is the government which doubles as the NRM ruling party had a lot to lose by disgruntling a sizable chunk of its voter capital with the mobile money tax. Arguments against the tax were levelled mainly for the muntu wa wansi with little or no regard for any other demographic. The OTT, on the other hand, was a win for the government in a way that it would curtail a rising pseudo-intellectual class while reaping from it, UGX 200 at a time.
Furthermore, reduced internet usage has far-reaching political ramifications, especially given the government’s sentiments on the “misuse of social media.”
The ability to transmit information in real time, mobilize populations and encourage uncensored speech has created fear among governments and the powerful so much so that there is a general increase in restrictions on the use of the internet. Governments have adopted sophisticated technologies to block content, monitor and identify activists or critics, as well as criminalize legitimate forms of expression. In Uganda legislations like in the Excise Duty Act, 2018 under which OTT was legitimized is a true representation of the extent government will go to censor the internet. Other instances include the shutdown of social media during the 2016 general election, the selective use of the Computer Misuse Act etc.
The internet has become a crucial instrument to facilitate human rights and citizen participation and is therefore fundamental for building and strengthening democracies. Despite the onslaught from the government like with the OTT Ugandans continue to find means to maneuver but at an even greater cost. The question to ask now that the existing OTT measure has not gained as much success as anticipated, especially in the tax arena, will economics or politics take the day?