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Govt dragged to Constitutional Court over social media tax

The constitutional has been served with submissions drafted by lawyers who are representing individuals and an organisation who are challenging Social media tax or OTT as un- constitutional. Derrick Kiyonga breaks down the arguments which will require a response from the Attorney General, Uganda Communications Commission (UCC) and Uganda Revenue Authority (URA) who are the respondents.

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TAX | A group of individuals and an organization have dragged government to the Constitutional Court seeking interpretation of the new social media tax (Over the Top Services–OTT), which they claim was made and imposed on people in bad faith.

The individuals, who include Daniel Opio, Moses Baguma, Emmanuel Okiror, Silver Kayondo and Raymond Mujuni, a journalist working with NBS Television and Cyber Law Initiative, a technology company, contend that the tax was tinged with bad faith since it started with President Museveni writing to Matia Kasaija, the Minister of Finance, in a letter dated March 12, 2018.

In the letter, Museveni was complaining about what he termed as the Ministry of Finance and Uganda Revenue Authority’s (URA) “unseriousness” of failing to tax what he referred to as “olugambo (gossiping)”, “opinions”, “prejudices” and “insults” on social media.

On May 30, 2018, Parliament hastily passed the Excise Duty (Amendment) Act, 2018 whose Sections 3(b) and 6(g) impose excise duty of Shs200 per user per day for access to social media services which was effected on July 1, 2018.

“The President sternly ordered, in the same letter, that the “opinions, prejudices, insults, [and] friendly chats of social media users must pay tax because we need resources to cope with the consequences of their gossip,” they say in the preamble of their submissions, adding that the tax is, to put it simply, vengeful.

The petitioners who are represented by Kiiza And Mugisha Advocates assert that social media tax amounts to double taxation of social media users, a move they say is inherently unfair, suffocates business and is certainly not in national interest or common good.

“The age old principles of fairness and equity of taxation are offended by OTT tax contrary to common good required by Articles 8(A)(1), 45, 79, and national objectives and directive principles of state policy XXVI of the 1995 Constitution. To access social media or use, under the impugned law, a person must pay tax,” the petitioners submitted.

They contend that for a user to access OTT services, that person must have internet bundle bought via airtime. Airtime, they say, is already subject to 18 percent Value Added Tax (VAT) and 12 percent Excise Duty. The same issue was raised by Kasilo County MP Elijah Okupa during parliamentary debate, but the petitioners’ lawyers say he was ignored “without justifiable reason”.

Unconstitutional

OTT tax should be struck down, according the lawyers, because it violates Article 21 of the Constitution which guarantees equality.

According to them, the tax violates equality because it only targets some internet platforms, primarily, social media.

“This is called differential taxation. It is a special tax targeting not all businesses but just some OTTs and chiefly social media. It is not even a tax on all media access, which would still be problematic, but only on media’s newest, fastest and most popular segment otherwise called new media (social media),” they contend.

“Contrary to the said constitutional guarantees of equality and non-discrimination in all spheres of human life, they argue that social media tax pushes those who cannot afford it off such media
platforms as WhatsApp, Facebook, Twitter and YouTube,” they say.

“Access to news, entertainment, education, inspiration and wisdom from poems, mentors and experts and others is now a preserve of those who can afford the social media tax in Uganda. Nothing illustrates inequality better. The tax disadvantages and discriminates against the economically weak potentially consigning them to their miserable state as they may never catch up with the rest of the modern world bereft of the boundless opportunities that social media presents.”

They also said that the Constitutional Court should annul social media tax because it hinders business and entrepreneurship in contravention of Articles 40(2), 79, 43, 20, 8 A (1) and 45 of the constitution.

The Constitution guarantees economic rights in Article 40(2). These include the right to work and practice their trades and occupations of their choice, they say.

The social media taxi enacted by Sections 3(b) and 6(g) of the Excise Duty (Amendment) Act, 2018, they contend, blocks all those who are unable to pay daily Shs200 from accessing social media.

“The tax shuts the social media door to all those who cannot afford but had the designs of using the digital platform to look for jobs, answer their questions, get mentorship and apprenticeship, could only
reasonably earn a living via social media, your fate is sealed,” they say.

Freedom of speech

The petitioners say social media tax blocks communication of many people who can’t afford thus unjustifiably limiting, on monetary grounds, freedom of expression and a range of human rights that thrive on freedom of expression.

Article 38 of the constitution provides for the right of individuals to peacefully participate in civic activities and to influence government policy through civic organizations.

Accordingly, this right they say is unjustifiably limited through the imposing of the daily payment of social media, which impedes access to social media platforms which are an avenue on which such civic duties are carried.

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