This archive report was first published on 7 December 2019.
Uganda's introduction of a tax on mobile online services in 2018 had a devastating impact on the country's internet users. According to a report by Mozilla and the African Union Commission, the number of internet users in Uganda dropped by nearly 30% between March and September 2018.
The tax, which included a one percent levy on transaction values and a Ush200 ($0.05) daily charge on over 60 online platforms, including Facebook, WhatsApp, and Twitter, was imposed without public consultation or impact assessment.
As a result, millions of people struggled to afford internet access, with internet costs in Uganda being prohibitively high. The country's gross domestic product per capita per day is Ush7,000 ($1.90), and many live off less.
The report highlights the need for governments to focus on connecting more people to the internet rather than building barriers that keep them offline. The researchers recommend that any new taxes, including those on the ICT sector, must be subject to a detailed economic impact assessment.
Uganda's economy also suffered as a result of the tax, with the country losing 2.8% in economic growth and Ush400 billion ($108 million) in taxes.
As governments in the region rush to introduce digital transformation initiatives, the report warns that sector-specific taxes pose a considerable threat to internet access and affordability for all users, but especially low-income and marginalized people.
