Causes and consequences of mobile money transaction taxes in Uganda

Abstract

Mobile money has seen fast adoption in the decade since its emergence, becoming the formal financial service of choice for many underserved groups in developing countries. Its success has attracted the attention of tax authorities seeking to broaden their revenue base. The resulting taxes, especially mobile money transaction taxes, are controversial and incidents of it are increasing. As with any new industry, it isn’t clear that the nuances of how mobile money is situated within the wider economy are fully understood at a policy level. Despite the diverse methods proposed to tax mobile money, there have been accusations of policy mimicry as countries appear to replicate the policies of others without necessarily following their own established policy processes. The result is often poorly designed taxes whose consequences, both industry and development practitioners fear, have not been fully considered. On the other side, governments and revenue authorities feel that their motives are misunderstood. With falling commodity prices, burgeoning debt. The purpose of this study was to examine the topic of mobile money taxation through the lens of these different viewpoints such that the reader might gain an insight into their perspectives. Firstly, it looks at the motivating forces behind the proposal of mobile money transaction taxes. It then seeks to uncover the unintended consequences of these taxes. Descriptive research design was used that enabled the researcher to organize the collection of data. In order to make the research effective in achieving its defined objectives, the researcher mainly targeted mobile money agents in Lugala-Kampala. The research was based on a sample of 28 mobile money agents or operators. Simple random sampling was used for the research. Primary data collection methods adopted in this research included questionnaires while secondary sources of data were also used to compliment primary data. The research findings revealed that mobile money transaction taxes had a number of negative consequences on mobile money operators. This study therefore recommends a further reduction or removal of mobile money taxes. Key words: Mobile money tax, Causes and Consequences