The shutdown of the internet on 13th January might as well have been the death of the OTT tax in Uganda. OTT tax has been labelled the “controversial tax” which is one of the many reasons why this OTT tax should be scrapped in Uganda. It was introduced in 2018 as many Ugandans woke up to a new reality where they had to pay an extra charge to access social media platforms like WhatsApp and Facebook as if the money spent on data wasn’t enough.
In 2018, a spike in VPN downloads was recorded in Uganda, efforts by several Ugandans to dodge the tax. The government justified this new tax with need to widen the tax base to increase revenue in the country. In addition, the President claimed that the youth were spending so much time online and spreading wrong information hence the need to be regulated.
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However, the new tax performed quite terribly with URA (Uganda Revenue Authority) collecting a mere Shs 49.5bn out of the targeted Shs 284bn in 2019. It actually cost the government more money to implement the tax than the revenue it received from it. More money was lost because of the ability of tech-savvy Ugandans to bypass the tax with access to WiFi and VPN.
UCC also reported a 30% decline in the number of internet users. That is a huge percentage for a country like Uganda where majority of the population still lacks access to internet connectivity.
More pressure came in 2020 from World Bank advising the government that the OTT tax should be scrapped since it was a huge block to information that people needed to access about the ongoing pandemic. Most of this information was online which people could not access because of the economic crisis that made it difficult to afford even the cheapest of internet rates.
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Three years later and it’s a de Ja Vu moment for many Ugandans taking them back to the moment when the social media tax was first introduced. With the partial restoration of the internet as social media platforms remain down, the gateway to using these platforms is through VPN.
Using VPN is the new normal though it comes with a number of challenges like slow internet speeds, draining phone battery and constantly doing the ‘I’m not a robot’ test every time you try to access some websites.
Why OTT tax should be scrapped?
In reference to its poor performance in the past combined with the inconvenience it causes for people who can’t afford it, OTT tax should be scrapped. Its existence has resulted in financial loss directly in terms of revenue collected and the number of internet subscribers.
It’s been almost a month now and no mention of restoring the internet fully by the government. How about the law-abiding citizens who paid monthly, quarterly and annual rates for OTT? Will they ever get compensated or should we simply move on to the new normal? Many have expressed pure frustration knowing that they paid the tax for a year which might never be compensated while others support the idea that the OTT tax should be scrapped.
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