The Effect of Mobile Money Tax on the Profitability of Mobile Money Businesses: A Case Study of Kyebando in Kawempe Division, Kampala District

Abstract

The main objective of the study was to determine the effect of mobile money tax on the profitability of mobile money businesses. The study specifically analyzed the effect of mobile money tax on the volume of transactions , commission earned by mobile money agents and the general effect of the above mentioned tax on the profitability of mobile money businesses. The study utilized Simple Random Sampling where each mobile money agent had an equal chance of being selected. A sample size of 50 respondents was used and each respondent was issued a questionnaire. The data collected was analyzed by both univariate and bivariate analysis. Pearson chi-square statistic was used to test the stated hypothesis at 0.05% level of significance. The Pearson chi-square revealed a significant relationship between the volume of transactions and profits of the mobile money business. The Pearson chi-square also revealed that there was a significant relationship between commission earned by the mobile money agents and profits earned by the mobile money agents. This revealed that an effect on volume of transactions and commission earned by mobile money agents affects profitability of mobile money businesses. The study further revealed that there was a drop in the volume of transactions as well as a drop in the commission earned by the mobile money businesses hence a negative effect on the profitability of mobile money businesses. In conclusion, it is evident that mobile money tax has affected profitability of mobile money businesses. Therefore, the welfare of the people employed in mobile money businesses reduces as their purchasing power is curtailed due to reduction in their commission. This affects their standards of living and also jeopardizes their economic productivity. Therefore the study recommends that the government should drop the mobile money tax and resort to other sources of revenue that have less damaging effects on citizens and the economy since mobile money tax, however low it may be, has a very high effect.