FDC Urges Government to Slash Mobile Money Withdrawal Tax

The Forum for Democratic Change (FDC) has voiced strong opposition to the current excise duty on mobile money withdrawals, urging the government to implement a reduction. The party argues that the tax is making it more expensive for Ugandans to access their funds and is discouraging the use of digital financial services.

FDC Vice Chairperson Robert Centenary highlighted at a press briefing in Kampala that the government’s tax structure effectively levies the same money multiple times. This begins with income earners paying taxes like Pay As You Earn, then incurs excise duty when funds are moved and withdrawn via mobile money, and potentially attracts Value Added Tax when used for purchases.

Centenary emphasized that this cumulative tax burden disproportionately affects low-income workers, small businesses, and the vast network of mobile money agents, many of whom are women and youth. “Small businesses and ordinary Ugandans depend heavily on mobile money transactions to do business and meet their daily needs,” he stated.

The FDC also raised concerns about the impact on mobile money agents, suggesting that over 150,000 agents are experiencing declining incomes due to reduced transaction volumes. As users seek to avoid the charges, many are reverting to cash, leading to a drop in business for these agents and even causing some kiosks to close.

Furthermore, the party warned that the existing tax levels could hinder financial inclusion, particularly for individuals in rural areas or those with limited access to traditional banking services who rely heavily on mobile money. The FDC called for a reduction in the withdrawal levy and urged the government to stop taxing both the withdrawal amount and the service fee for the same transaction.

Instead, the FDC proposed that the government should focus on taxing the profits of telecommunications companies more heavily. “Government should instead focus on taxing telecom companies’ profits and reduce the burden on ordinary citizens,” Centenary concluded. The party believes that lowering mobile money transaction costs would stimulate digital finance, protect agent livelihoods, and support the growth of small businesses.

Source: Nile Post