Assessing the effectiveness of newly introduced taxes on mobile money services in Uganda. A cse study of Airtel Money Services in Central Uganda

Abstract

This research aims at examining the effectiveness of newly introduced taxes on mobile money services in Uganda. The case of Airtel Money Services in Central Uganda, the study was aided by the following objectives which include; To identify how the introduction of mobile money taxes affected mobile money services; To find out challenges of implementing the mobile money tax in Uganda and to suggest ways of improving revenue from mobile money taxes in Uganda. The study adopted both a descriptive and a cross sectional research design. The main source of data in the study was primary source; the population of the study was 87 that participated in the study. Questionnaires were used to collect data, which was then coded and analyzed using the Statistical Package for Social Scientists (SPSS). The study found out that Tax on the mobile money is regressive in nature i.e. disproportionately affecting low-income earner, Mobile money services are used as a source of saving and as such mobile money taxation is a major threat to financial inclusion. The study also found out that Uganda could suffer a reversal of gains made towards financial inclusion and that Uganda has several untapped or underutilized potential tax avenues which are attributed to inefficient tax collection methods or tax compliance indiscipline as some people have chosen to evade taxes. The findings on the effect of the newly introduced mobile money taxes on Consumers was shown by most of the respondents agreed that the effects of mobile money on financial sector development are limited and inconclusive. The study recommends that Uganda should use several untapped or underutilized potential tax avenues which are attributed to inefficient tax collection methods or tax compliance indiscipline as some people have chosen to evade taxes. Government should explore other sources of government revenue, that is; there exist loopholes in the management of mineral resources in the country. In addition, Government should work hard to reduce on the level of corruption and provide the needed services from the collected taxes. With quality service delivery and tax compliance that is expected to rise among the citizens and as a result, there will be more revenue generated.