Online tax hurts the poor

A wave of online censorship is affecting more than public discourse. It’s costing some Africans at least 10% of their incomes and seeing economies bleed millions of dollars.

Uganda levied a tax on social media use on July 1. Ugandans must now pay 200 Ugandan shillings ($0.05) every day before they can use social media sites such as WhatsApp, Twitter and Facebook.

Although the move is touted as an effort to increase tax revenue, President Yoweri Museveni reportedly originally intended that the tax would help to curb online “lugambo” or gossip.

READ MORE: Uganda reviewing social media taxes after outcry

“African governments have realised that they cannot openly censor free speech online without criticism from the global community,” said Kuda Hove, the legal and information communication technology policy officer of the Media Institute of Southern Africa-Zimbabwe. So some are taking steps to “restrict access to over-the-top services and social media platforms, which is a form of censorship”.

For one out of four Ugandans (the lowest-earning quartile of the population), the new tax has increased the cost to connect by 10%, according to data compiled by the Alliance for Affordable Internet. It will cost this group almost 40% of their monthly income to buy one gigabyte of data.

“The economic and social impact of social media tax is real,” said Gilbert Sendugwa, the executive director of the Africa Freedom of Information Centre, based in Kampala. “People who have been using social media as a source of information for economic opportunities or those that have been using it to market their products have been affected.”

The poor have in effect been muzzled.

For the wealthiest quartile of the population, the cost to connect has increased by 1%, one-tenth of the increase that the poor have to endure.

“By and large, this new excise duty disproportionately and negatively impacts low-income Ugandans and their ability to affordably access the internet,” the alliance said in a statement.

Sendugwa said: “Indeed, it’s very common for people, especially those living in the village, to say that they are on social media once a week as opposed to before the tax, when they would be having access more regularly.”

Twitter user Rogers Mugarura put it this way: “How many ordinary folks in villages can sacrifice a kilo of maize flour for paying to access Facebook?”

The tax was introduced at the same time as a 1% tariff was implemented on the sending and receiving of mobile money.

Revenue from this form of transaction has already taken a knock as people have reverted to cheaper ways.

“A colleague of mine recently told me that he has resorted to sending money to pay workers at his village farm by matatu [taxi] because it is cheaper than sending [it] by mobile money,” said Sendugwa.

READ MORE: Clampdowns in Africa carry a big cost

Halfway through July, the government reduced the mobile money tax from 1% to 0.5%, adding that it will be levied only on withdrawals and not on “sending, receiving and depositing” money, as previously indicated.

But the damage to the economy has already been felt — the Uganda Central Bank reported that the total value of mobile cash transactions had declined by 672-billion shillings ($182-million) in the first two weeks after the rolling out of the new laws.

Inflation also rose by one percentage point in the four weeks after the implementation of the law, according to the bank.

But Uganda is not the only country taxing media users. Tanzania has introduced a $930 licence fee for bloggers, online radio stations, online streaming platforms and forums to publish content. It also has many other requirements, including “a requirement for bloggers and any other internet-based service to share the names of their shareholders, their approximate cost of investment, tax clearance certifications and pay … an initial application fee, a licence fee and renewable licence fee after three years and a lot more”, said Wathagi Ndungu, the Google policy fellow at the digital rights advocacy group Paradigm Initiative.

READ MORE: Kenyan authorities are cracking down on social media ahead of elections

“This new law denies new people space for innovation,” one Tanzanian blogger in Dar es Salaam said. “How are we going to innovate through media if we are being stifled. On the economic front, it stifles the rights of the young people who have no resources but want to express themselves.”

According to Elsie Eyakuze, another blogger in Tanzania, “no voices except official government coverage, public sector accounts and sycophants or government trolls get left alone. Everyone who even questions or comments on this administration’s activities ends up attracting rude bills.”

Although she can afford the fees, Eyakuze has “iced” her own blog in solidarity with the start-up businesses and struggling artists who cannot.

Thalia Holmes
Thalia Holmes

Thalia is a freelance business reporter for the Mail & Guardian. She grew up in Swaziland and lived in the US before returning to South Africa.

She got a cum laude degree in marketing and followed it with another in English literature and psychology before further confusing things by becoming a black economic empowerment (B-BBEE) consultant.

After spending five years hearing the surprised exclamation, "But you're white!", she decided to pursue her latent passion for journalism, and joined the M&G in 2012. 

The next year, she won the Brandhouse Journalist of the Year Award, the Brandhouse Best Online Award and was chosen as one of five finalists from Africa for the German Media Development Award. In 2014, she and a colleague won the Standard Bank Sivukile Multimedia Award. 

She now writes and edits for various publications, but her heart still belongs to the M&G.     


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