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UCC asks court to free it of responsibility in OTT tax, says has no powers to enact laws

TAX | Uganda Communications Commission (UCC) has asked court to discharge it from any liability in relation to a petition against the controversial social media tax, saying it has “no power to enact laws.”

The communications regulator called for the exceptions while giving its closing arguments in the petition now before the Constitutional Court challenging social media tax, better known as OTT, as un- constitutional.

Though the six petitioners have directly accused UCC of failing or neglecting to enact regulations that support net neutrality (a principle that Internet service providers treat all data on the Internet equally, and not discriminate or charge differently by user, content, website, platform, application, type of attached equipment, or method of communication) and open internet, UCC has a completely different perspective.

It has ridiculed the petition as “a fishing expedition” and that the petitioners have only added it as a respondent to satisfy their whims.

Other respondents in the petition are the Attorney General who is government’s chief legal adviser and tax body, Uganda Revenue Authority (URA) but they are yet to file their respective written closing arguments as per court decree.

The case stems a parliamentary sitting of from May 30 2018 which 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 affected on July 1, 2018.

This triggered this petition filed Cyber initiative (U) limited, Bill Daniel Opio, Moses Baguma, Emmanuel Okiror, Silver Kayondo and Raymond Mujuni a journalist with NBS television.

They said the move to tax social media 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.

Therein, 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.

In UCC’s final arguments, it says that the petitioners’ prayer that court compels it to enact regulatory framework for OTT services that guarantees net neutrality and open internet principles is based on ignorance since powers to enact laws strictly reside with parliament.

The arguments drafted by UCC’s legal department are partly premised on Article 79 (2) of the Constitution that restricts where Parliament delegates this function to another body.

In instances where Parliament has delegated its legislative function, it has done so by way of statute, ICC ‘s arguments go on.

UCC ‘s legal team claims that it’s struggling to trace where exactly in the Uganda Communications Act, the parliament of Uganda has delegated it’s legislative powers to UCC.

“It’s our submissions that making regulations is not one of the functions or powers of the second respondents [UCC). Under section 93 of the Uganda Communications Act 2103, the power to make regulations is vested in the Minister of information Communication Technology and National guidance,” UCC says.

Equality

In their final arguments filed in October, the petitioners through Kiiza & Mugisha Advocates asserted that OTT tax should be struck down 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 over the top services (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 contended.

But UCC predictably tries to duck from this contention saying it is not “right party to address matters in respect of differential taxation” especially, it says, in light of the superior knowledge possessed by URA in matters of tax.

That said, the communications regulator tries to bring to the table it’s understanding of the case, claiming that it’s aware that matters of technology are dynamic in nature and new applications are always being created and released by innovators every day.

“If the petitioners’ problem here is that the tax doesn’t apply to all existing over the Top platforms, I’m certain the government of Uganda would be pleased to extend the application of this tax to all new OTTs that have been created since the inception of this tax,” UCC’s legal team says.

The regulators asked that the petition, though filed in public interest, should be dismissed with costs.

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