Out To Lunch: An inclusive economy that works for all will widen the tax base

By Denis Jjuuko

There is a beautiful restaurant in Nsambya located next to the American Embassy. The rich and expatriate class frequents it. It even has a butcher shop that cuts beef according to use; steak, stew and the rest. Once you are rich, you get to know that not every piece of meat is good for a steak dinner! But dining at this place can be extremely disturbing. Once you sit and look beyond the eyes of your date, you will not miss what is happening across the hill. The worst of poverty is seen in the Kabalagala/Kibuli hill/valley. This restaurant provides the vantage point for anybody to see how divided our country is.

Mud and wattle tin roofed housing units where probably the guys who serve coffee at this restaurant reside dominate the hill and valley. The filth and the poverty can make you choke on your sizzling ribs. Most people arrive at this restaurant in their SUVs and probably don’t notice this. The majority of our people live in such conditions. The gulf in class on these two opposite hills probably is the reason our tax base is small.

There is a proposal to widen the tax base by taxing Facebook, Whatsapp, and Twitter users. These people are actually taxed when they buy airtime, which they turn into data. Taxing them again when they turn airtime into bundles will be double taxation. Facebook and Whatsapp users are not only involved in Lugambo or rumormongering. Platforms like Facebook and Whatsapp have helped many businesses grow, which has led to actual production. Social networking sites revolutionalised advertising, which is a key element in the growth of most enterprises.

The problem with Uganda’s small tax base is somewhat because Uganda Revenue Authority (URA) finds it expensive to tax them. They don’t want to spend more money collecting taxes than they can actually collect and it makes business sense. It is easier for URA to tax the guys at this beautiful restaurant at Nsambya hill than those across in the Kibuli/Kabalagala valley. The guys at Nsambya hill use Facebook and the guys in the valley probably don’t. There are about 2.6 million Facebook subscribers in Uganda, which is just 5% of the country’s estimated 44 million population. So taxing the 5% and leaving out the 95% won’t do much magic.

The 95% also don’t see any need to pay taxes anyway because when they go to hospitals, there are no drugs. When they take their kids to primary schools, they turn out after a few years worse than they were sent in — unable to read, write, and most importantly think. When they join university and graduate, they walk the streets for years without any job prospects. The politicians simply tell them to be innovative and create jobs.

Those who live in Kampala are usually pushed off the road by convoys that stretch a mile. Some of the vehicles in the convoys are carrying a single chair or a spare suit. And a monster truck that serves as a toilet is usually part of the convoy and another that is customized as a podium and lectern. One day, leaders should disguise themselves, board a taxi and then send the convoy on that very road where the taxi is and hear what people say.

The most rewarding job today in Uganda is being a politician of the ruling party. It guarantees one a monster Land Cruiser V8, a mansion, and air tickets for kids to attend bridal showers and birthday parties. The majority of people see no reason to pay taxes. So they do everything they can to ensure they don’t pay or underpay.

If we want to widen the tax base, we must first ensure that people see how their taxes are being spent. What has made the Catholic Church the biggest brand in the world is not because they promise people to go to heaven when they die. People see where their ‘tax’ is used. They see functioning schools and hospitals in their communities. So when they are told to build a church, they give more and volunteer labour. That is why Churches are the most majestic thing in any community in Uganda. When the parishioners are asked to pay the ‘tax’, which is offertory every week and tithe, they pay it without question. It is high time the government borrowed that model.

In any community in urban areas today, even a simple thing like policing is done by individuals. Community leaders visit homes every Sunday collecting security fee, which is used to either build a community police post and/or pay fuel and allowances of police officers. In most communities, people are asked to contribute to maintain roads and such. Community involvement isn’t a bad thing. But people are doing police and government work because the taxes have been used for something else.

There are countless Members of Parliament, Presidential Advisors, Resident District Commissioners and their assistants and lots more such people than our income can support. Taxing Facebook and Whatsapp users won’t solve our tax problems. It will actually make doing business more expensive.

There are very few institutions that work. And many public servants will not attend to you unless you pay them a bribe or know somebody who knows somebody who knows somebody who actually knows somebody. If we can fix those issues, you will have more people willing to pay taxes.

The writer is a businessman and media consultant. djjuuko@gmail.com

**Internet photo