Uganda’s world greatest money lender the World Bank has called for the scrapping of over-the-top tax-OTT to intensify access to coronavirus prevention massages by the most vulnerable people.
According to the World Bank-Uganda economic update 2020 report the tax has not achieved its intended objective since it is difficult to collect and easy to bypass users using Virtual Private Networks -VPN yet reducing the proportion of internet users and widening digital, income inequality which needs to be re-evaluated.
In 2018, the government imposed a 200 shillings daily tax on using social media expecting to raise at least 284 billion shillings in 2018/19 financial year but it has been able to collect 49.5 billion shillings.
As the country is facing coronavirus pandemic and the suggestion that campaigns for the 2021 elections be done virtually either on social media or traditional media like radios and newspapers, the tax must be removed for wider accessibility.
“Removing the social media tax would contribute positively to the COVID-19 crisis response and encourage the use of the internet and digital technology in Uganda,” the World Bank says.
The availability of digital services such as online shopping, food delivery, social media, instant messaging, and online entertainment allows people in self-isolation to remain connected and socially and economically active while at home.
The governments can promote affordability by removing taxes and levies applied to specific digital platforms and services, thereby reducing transaction costs and supporting telecommunications companies in lowering prices for services that are needed during the crisis. In the long run, this is also likely to broaden the tax base.
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