Bursting the bubble of our `intellectuals’ by exposing their
most cherished ideals as a bunch of delusions
Many Ugandan elites have been shouting themselves hoarse
denouncing the tax on social media. They also claim they are already burdened
paying “too many taxes”. With a tax to GDP ratio of 14%, Ugandans are among the
least taxed people on this planet. And after the abolition of Graduated Tax (or
tax per head), only 621,366 people are registered to pay the direct personal
income tax, Pay As You Earn, in an adult population of close to 18 million
people.
But let us for argument’s sake say the tax is bad. The solution
is simple: organise politically and stop government from collecting it. But I
know Ugandan elites are politically unreliable. They dare not stand for their
beliefs. They prefer to sit in the comfort of their offices, houses, and bars
and pontificate against the government as if Uganda needs the intervention of
foreigners to be saved from President Yoweri Museveni.
This is where Museveni outshines all of us: when he felt the
election was rigged in 1980 and the country mismanaged, he did not sit idly complaining.
He picked guns, organised people, mobilised resources, built a national
political coalition, and rallied international forces to this struggle. After
five years of combat he triumphed.
Ugandan elites lack patriotism. They want to get public goods
and services for free. They do not want to pay taxes that fund such services.
They see the state as a cake to eat, not a cow to feed. Everyone comes to the
state in search of personal advantage. Few see it as an institution to build
for the collective good. This attitude stands in stark contrast to how Ugandan
elites relate to social events like weddings, funerals, and churches to which
they devote so much money without demanding accountability.
Some Ugandan elites claim they are too poor to pay Shs200
per day for this tax. But this tax is imposed on social media, which is used on
smart phones. How come “poor” Ugandans afford expensive smart phones? The
social media tax is imposed on the middleclass, not on ordinary peasants.
However, these elites use the institutions of mass communication to project
their peculiar interests as those of everyone. This is how democratic debate in
Uganda is rigged in favour of a few.
All governments need revenue: to keep law and order, to
co-opt elites, and to provide public goods and services to their citizens. When
a government’s political survival depends on generating revenues from its
people, it will be driven by self-interest to govern in a more enlightened
fashion. It will listen to its citizens about the policies necessary for growth
so that it can generate more revenues.
For many years, the productive margin in Uganda’s search for
revenue did not lie in the domestic economy; in our gardens, factories, and
shops. It lay with foreign donors. For every fiscal shortage, our government
would take a begging bowl to Paris, London, Brussels, and Washington. This
disarticulated the state from citizens and made international donors the most
important influence in policy making. It is impossible to build a democracy
where foreigners fund the government because he who pays the piper calls the
tune.
Uganda’s actual liberation came accidentally, when
international donors cut aid over the passing of the Anti-homosexuality Act.
The government of Uganda could have compensated this with new taxes. It was
afraid of a political backlash and went on a borrowing spree from the domestic
market. In only five years, the domestic debt has ballooned to Shs12.4 trillion,
and interest payment is now Shs1.9 trillion. The same Ugandan elites who have
been complaining against this growing debt do not seem to realise that only
taxation can get the country out of the debt spiral.
If this tax is economically destructive, it will correct
itself. The advantage with a modern economy is that it has high revenue
elasticity. By elasticity I mean responsiveness – the tendency to grow in the
face of positive incentives and to decline in the face of negative ones. If the
tax on social media and mobile money hurts the economy, it will cause a decline
in the rate of growth. It will not take long for government to discover that it
has harmed itself.
When a government extracts revenues from its people without
formulating favourable economic policies and providing public goods and
services in return, private economic agents will most likely withdraw or fail
to invest. Physical capital will depreciate, the economy will decline. A
government that sought short-term gains through destructive taxes will find
that in the long term it has undermined the economy and, therefore, its source
of revenue. Any government facing a fiscal crisis will be in political decay.
The claim that Ugandans do not want to pay taxes because
government is not accountable is nonsense. In the last election, opposition
leader Kizza Besigye got 3.5 million votes (he claims 7 million). If every one
of the 3.5 million contributed just Shs 1000 per month to FDC, the party would
raiseShs42 billion per year or Shs210 billion over five years, or Shs558
billion if the 7 million votes is the correct figure. With such financial
muscle, Museveni would become history. If Ugandan elites want change, why are
they not investing in the man fighting for it and who has never stolen the
money they have contributed to his cause?
Ugandans lack commitment to the state and its politics
because they see is as a place you go to extract things, not one where you grow
the wealth of the nation. That is why all our political parties are
cash-starved. No one wants to contribute to politics, regardless of whether
there is a precedent of their money being stolen. This sharply contrasts with
Rwanda where citizens pay taxes diligently and even make voluntary
contributions to the state whenever need arises.
For example, Ugandans want increased wages for teachers,
medical workers, and other government employees. They also want free education,
healthcare, cheap water and electricity, good roads and bridges etc. But they
do not want to pay for them. This shows we treasure our faith, weddings, and
funerals because they are socially rewarding but we do not treasure political
liberation and economic advancement. For example, if you call a wedding
meeting, everyone will come and contribute generously. But if you call a meeting
to raise money to begin a business, no one will show up. That is the real
problem of Uganda.
*******
amwenda@independent.co.ug
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