Social media tax why Nigeria should not follow the Ugandan example Favour Oyeleke DigiLaw

The Uganda Government introduced a social media tax targeted at the use of Over The Top services (OTT). OTT provides voice and messaging over the internet. The social media tax came into effect on major social media services including Facebook, Twitter, Skype, Tinder and WhatsApp. Every citizen is required to pay a tax charge of 200shillings ($0.05) per day for social media use, and an additional 1% levy on the total value of mobile money transactions.

President Yoweri Museveni Uganda social media tax DigiLaw
President Yoweri Museveni of Uganda

President Museveni had stated that the social media tax was to boost the revenue of the economy, stop ‘false’ news and online oppositions. However, it is evident that the tax has been more efficient at obstructing net neutrality, freedom of speech and suppressing resistance against a power-drunk president, who has been in this position for 32 years.
The net (network) neutrality institutes the principle of equal internet traffic and emphasized that internet service providers should not block online access in any way. Thus, Uganda has violated this principle, without a backing of legal protection. The Uganda government is obstructing net neutrality with ranked pricing and social media blocking. The social media tax has turned information and access to the internet a privilege, only available on luxury to those who can afford it.

Unsurprisingly, the use of social media has drastically reduced in Uganda after the imposition of the tax. The Uganda Communications Commission (UCC) evaluated a declining trend with a drop of 3 million internet users within three months in 2018. The supposed purpose for which the tax was established has not been met, as the number of tax payers and the figures for the OTT revenues keep dropping.

In July, the Uganda Government estimated Ush5.6billion ($1.5million) as revenue from the tax. In August, the figures fell to Ush4.1billion ($1.1m) and went down to Ush3.97billion ($1.1million) in September. Internet subscriptions also reduced from 15% to 0.39% within August to September. The value of mobile money transactions even dropped by almost a quarter, to 14.8trn Uganda shillings (£3.4bn) between July to September 2018.

The government seems to regard this tax as an innovative strategy, but it has not stimulated absolute compliance from the people or sky-rocketing figures for revenue. Some Ugandans are circumventing the enforced OTT tax, with the use of virtual private networks (VPN) – which the government is threatening to block. On the other hand, some have opted to pay the tax. But, how long will Ugandans be able to keep up with the inconveniences caused by this tax? It is only pragmatic to imply that this tax can negate the economic growth of Uganda, clampdown the ability for people to connect with each other or even voice out their opinion on issues concerning the country.

Social media has become the powerhouse for mobilization by the press, politicians, activists- and mostly, for public opinion. Most political and social issues would have been consciously ignored, without people bringing such issues to the limelight on social media. Therefore, if the internet is made less accessible, the Uganda government will be impeding dissenting voices. Besides, the introduction of a regressive tax in a country where majority of the population earns less than $1.25 is presumably not a positive step to increasing Uganda’s economic growth. The average monthly income of low-income earners in Uganda seems extremely incapable of allowing them to access the internet affordably. If the cost to access the internet by Uganda’s poorest jumps to a ridiculous rate of 10%, by reason of the tax for just of 1GB of data, that will cost them nearly or over 40% of their average monthly income. With the tax, there will be limit to consumption and financial stability for low-income earners. This would in turn, reduce broadband adoption.

In the business sector, telecoms and private companies are equally affected in terms of yielding profit. Today, businesses employ social media to attract customers and advertise their goods and services. In fact, social media has created a platform for commercial networking with other businesses around the world. But, the new tax could deter productivity at this rate. As a result, striving to expand businesses could take an adversarial toll. Taxation in this circumstance can reduce income and lead to thousands of people losing their jobs in the digital sector.
Meanwhile, telecoms has gained recognition for offering special packages that provide user’s access to only WhatsApp, Facebook and Twitter, at a lower rate compared to that of a full data plan. The package also offers some savings to users who use these specific applications. But with the new tax, the benefits that come with this package might become eliminated. Equivalently, the cost of the tax doubles and becomes more expensive to access. So, users with limited budgets can hardly depend on these sorts of special packages and may be cut off from these services totally.

Every attempt at fighting back through legal containment or protest has almost been to no avail. The more social media becomes ubiquitous, the stronger the government’s resilience grows. The most recent protest against the social media tax was vehemently back lashed by the police on orders from the government. The police fired up tear gas to break up what they referred to as an ‘illegal’ protest. Regardless, the government cannot keep silencing criticisms instead of addressing them. .
Moreover, if this alarming trend of taxing social media spreads across Africa, especially in countries like Nigeria, it will be tragic. The African economy will pay dire consequences if this trend continues, and could be driven to the ground. In 2016, Chad lost an estimation of $20.8million, after nearly 8-months internet shutdown. Cameroon has also suffered a loss of $723,000 within 30days out of its intended 90 days internet shutdown.

In the same vein, the introduction of social media tax in Nigeria will be the death of many startups in the technology sector. This is because social media is the primary marketing channel for these startups. Therefore, the maiming effect on businesses that rely on the internet will be devastating. To start with, there are so many problems surrounding Nigeria- from poor medical facilities to the questionable quality of education, the extreme high fuel prices, bad roads and every other infrastructure. Nigeria will be burying itself if people will be forced to pay to express themselves online or demand for accountability. The extent to which social media has created impact is remarkable. Social media has given people the power to voice out their mind, and created awareness about so many things in varying ways. Nigeria can only be poorer without a democracy-free and vibrant social media.

Taxing social media can cut off the instigation of violence and fake news to some point- but not permanently. The result of attempting to curtail social media perpetually is what we see in Uganda currently. Consequently, it is of no doubt that African countries would be better off reproving the idea of taxation on social media.

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1 Comment

  1. This is a very brilliant and insightful article.
    What would you expect from a president with 32 years in office? Redundancy.
    It is the height of all shallow-mindedness to see social media as a platform to tax.
    We understand that some businesses operate on the internet but the provision of certain incentives can bring them into the formal tax purview.

    Taxing the internet is casting a general dragnet on the 21st century world. It can only take people back to the stone age.

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