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Public relations officials hit back at new social media tax

As worries deepen that communication plans and strategies will be hampered due to the taxation of Over The Top (OTT) services, commonly known as social media platforms, The Observer spoke to a number of public relations practitioners about the impact that the tax could create on the economy.

Cynthia Mpanga: President, Public Relations Association of Uganda

We appreciate that there is an urgent need for government to expand the tax base and the best way to do so is to use varied strategies. 

However, the OTT tax presents fundamental challenges which need to be deeply scrutinized especially for a growing nation like ours. For instance, we need to assess the impact on the capacity of communications services/platforms to transform other sectors.

This tax will certainly affect our profession as public relations practitioners if several users fail to access social media due to failure to pay the tax. It also has a ripple effect on access to information, which is a human right; affects the speed and quality of information flows which is also essential for development.

Access to social networks has particularly played a significant role in the growth of innovation, improvement in the general welfare of Ugandans and led to the “death of distance” by increasing access to markets in Uganda. We risk reversing the benefits for the majority of the masses who are hard-pressed to afford this tax.

Geresom Musamali: CEO, Vicnam International

The social media tax has its challenges but those can be overcome. This is the first time that Uganda is developing a local solution to the need to broaden the tax base and it should be encouraged rather than be shot down at first sight.

Ideas should, therefore, be welcomed on how to make the social media tax more effective rather than how to kill it instantly. One such idea would be to make the tax ad valorem to the total costs of the bundle used rather than specific per day.

That way, the levy charged to anybody who just uses a few megabytes a week would not be as heavy as that of some redundant fellow who gallops gigabyte upon gigabyte on pornography.

Admittedly, this tax is going to hurt students who use social media for research. This can be corrected by the Uganda Communications Commission designating the use of certain reputable academic research sites exempt from the tax. The list of those sites should be reviewed every six months to ensure that new developments are taken care of. For avoidance of doubt, fully registered Ugandan newspapers should be treated as reputable academic research sites.

Alex Busingye: PRO, Kampala International University

As Public Relations professionals, we rely on new media a lot. It’s a big part of how we communicate with audiences. We use it to distribute information and at the same time get useful feedback that informs our decision-making processes.

Alex Busingye

So, obviously I am not the biggest fan of taxing the internet (not mutually exclusive from social media). The core of the matter, however, is that we should be focused on making communication more efficient and free. Taxing communication is regressive. Taxing the use of the internet in any shape or form is worse.

Douglas Mazune: Communications Specialist at MARKOM Uganda

The OTT tax certainly cuts down online audiences and reduces the time they spend on our clients’ digital communications platforms. With digital communications insights, numbers don’t lie and when the numbers drop we get affected.

Douglas Mazune

There’s got to be a return on investment for our clients. We now have to pay more in promotion/boosting of social media pages/ posts to decelerate the decline. We have had to be more creative in making our content relevant.

On the other hand, clients that largely rely on mobile money/internet banking payment solutions will soon experience a drop in timely collection of revenue, which also affects their expenditure on service providers like us.

Moses Opolot: Lead Specialist, Close Touch Group

Social Media platforms, particularly WhatsApp, provide a cheaper and more efficient alternative for project teams to communicate and update working groups in one go.

Moses Opolot

Unfortunately, the OTT tax now means a reduction in the number of team members online as many are reluctant to pay a tax they are not sure will be used appropriately by the authorities to improve service delivery.

As communication professionals, we will now be forced to revert to the hitherto more costly methods such as phone calls to communicate to members that have opted to steer clear of this tax. This is an extra cost on an already limited resource envelope but also more time consuming if we have to reach out to each member individually.

Josephine Mayanja Nkangi: Communication specialist

This tax was ill-conceived and very poorly executed. In the first place, it should have been better explained and communicated. Secondly, this tax flies in the face of the development agenda the government is pushing.

Josephine Mayanja Nkangi

Social media, for those in the know, promotes the exchange of industrial ideas and trade especially for young people who are just starting out in business. At the very least, the tax should have been staggered based on usage so that technology can indeed be extended to a wider base around the country.

Josephine Omunyidde Zhane: Communication Advisor, International Fertiliser Development Center

Based on the economic situation, communication professionals have adopted technological advancement as a form of electronic media using web-based tools such as social media for public relations to reach the audiences worldwide in a cheaper way given its proven power to inform and create visibility of brands.

Josephine Omunyidde Zhane

This in turn portrays brand Uganda positively to the world given the activity in corporate, NGOs and development organizations. The introduction of OTT tax is already impacting the limited budgets, thereby driving towards ending organizational conversations with audiences; it will then yield to ‘He who pays the piper calls the tune.’

Samuel Matekha: Head of marketing and communication, KCB Bank

Taxation is good for any country that seeks to better its services. However, taxation on certain rights is retrogressive to development and rather impedes revenue collection.

Before the introduction of OTT, several companies had adopted the use of social media tools as channels for business growth, customer service enhancement and basic awareness. Some companies were spending more on online communication to reach masses across demographics.

Ugandans have been voluntarily consuming information while taking advantage of the “almost free” internet bundles to either be entertained, get information or even engage peers. 

I am sure OTT has already impacted on the growth of the service industry, reducing product reach and sales to business entities, both small and big. Government revenue from companies using social media to promote business is likely to drop significantly.

Uganda will continue to have serious information gaps and subsequent failure of service delivery, accountability from leadership since information has been curtailed. The country is not ready for this tax and alternative sources of revenue ought to be sought.



+1 #1 Ntoni Timbyetaho 2018-07-12 10:10
Dear Observer Editor,

The issue of social media tax is an exciting one. It goes without saying that the poor will always pay taxes painfully yet the rich or investors will always have capacity to negotiate for a waiver.

This time the low income earners are asking for a reduction or a scrap. Thats fair negotiation.

As a financial advisor, i feel the 200= daily OTT tax is not fair at all. How can someone who loads 300= BMs pay the same with someone who loads may be 50,000 worth BMs?

Also the un fairness is the design of mobile money. This was meant for the poor mostly in rural areas- under financial inclusion.

If you charge them 1% that to costly. Charge them only on withdrawing not on receiving.

I further advise that where their float is kept should be making money both for the state, client and the financial institutions as well.

I dont subscribe to accept that e-money should just be there without any return on it. Yours Ntoni Timbyetaho CEO Financial Planning Campaign
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+2 #2 Willcruiz 2018-07-12 11:05
#1) The gov’t has to be careful when it comes to regulating and taxing in the ICT sector because when they get it wrong the economy can be crippled even more.

The ICT sector is among the key sectors that are driving the growth of the economy and the dev’t of the country.

The mobile money and social media taxes were poised to have negative effects on the economy especially on innovation, financial inclusion and employment especially for the youth.
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+2 #3 Willcruiz 2018-07-12 11:06
#2) When you carryout a simple survey the majority of people employed in mobile money are youths and single parents especially the mothers thus any tax in that area will accelerate unemployment levels in the country.

Secondly people in the western world are using social media platforms to make money and are becoming millionaires and on track to becoming billionaires here our politicians are silencing social media for their own interests but not for their own people.

Actually if the gov’t wants to spur economic growth it should scrap all taxes on mobile money and social media platforms.
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