The government of Uganda admitted this week that it won't impose a social media tax, after President Yoweri Museveni said he wanted to levy a tax on platforms such as Facebook and WhatsApp.
"Olugambo [gossiping] on social media (opinions, prejudices, insults, friendly chats) and advertisements by Google and I do not know who else must pay tax because we need resources to cope with the consequences of their lugambo,” wrote Museveni recently in a letter to the finance ministry.
The ministry initially said it wasn't quite sure how the tax could be collected, but it would consult with telecommunications companies.
Internet users up in arms
The proposal caused an outcry in Uganda, not only from freedom of expression advocates, but also from those wary of the economic effects of taxing users of platforms such as Facebook and WhatsApp.
While Museveni said his government could raise 270 billion Uganda shillings ($73 million) in revenue, smartphone users said they would face an outright case of double taxation because they already paid tax when they bought data for their phone.
People took to social media to make their opinions on the new tax plan known.
"I buy Internet data almost on a daily basis using airtime — and airtime is already being taxed. Why should I be taxed again when I buy data?” wrote Lukwango, a Facebook blogger. "I think this is double taxation and I don't support it at all.”
Kampala parliamentarian Muhammad Nsereko was one of several lawmakers who spoke out against the measure. Cheap or free Internet and other tools that help in job creation should be promoted, he wrote on Facebook.
Information Minister Frank Tumwebaze initially called on Ugandans to see it as a challenge to come up with homegrown digital platforms in competition with Facebook and WhatsApp. But days later, Tumwebaze made an about-turn, telling reporters in Kampala: "There is nothing like social media tax. There is no such proposal. That is not what the president proposed. No one will tax you for using WhatsApp and Facebook.”
Museveni, he explained, rather wants to tax over-the-top (OTT) services, which are accessed via platforms such as WhatsApp, Skype and Viber using traditional telecommunications infrastructure.
OTT services provided on the Internet include instant messaging, video streaming and calling apps. Increasing use of such services worldwide has led to revenue losses for some state-owned telephone, satellite, or cable networks.
Taxation in the digital economy is still largely a work in progress. But governments in the developing world are increasingly seen to be seeking to regulate OTT services. Columbia, Indonesia, Thailand and Bhutan are among them.
Sensitive to criticism
Many also believe that Museveni, facing an increasingly critical citizenry after 30 uninterrupted years in office, has an ulterior motive in proposing the social media tax. With political protests banned, his critics often use social media to vent their frustration at "Dictator Museveni”. Academic and activist Stella Nyanzi was jailed last year for calling Museveni "a pair of bollocks" on Facebook.
Uganda even blocked social media and the Internet during presidential elections in February 2016.