Effect of OTT Tax on Students Welfare: Case Study of Makerere University

Abstract

The effect of OTT tax on students welfare research was conducted by Mutesa Apolonia in Uganda at Makerere University school of statistics and planning for four month (January to April) 2019 for the partial fulfillment of the bachelor’s degree of science in Quantitative economics. Over The Top tax was locally known as social media and was introduced on Friday the 1𝑠𝑡 of June, 2018, when the Parliament of Uganda passed a 32.4 trillion Shilling 2018/2019 budget. Every individual was entitled to a new 200 shilling (~0.05 USD) tax “per user per day of access” on “over the top services” (OTTs). The same budget introduced an additional tax on mobile money transactions “of receiving, payments and withdrawals” valued at 0.5% of the value of these transactions .There was no immediate comment from cell phone operators or social media companies, but rights advocates denounced the move. Data was collected from a sample of 369 respondents, using questionnaires and face to face interviews. It was edited and then coded in numerical terms for easy analysis and interpretation. Findings were presented in tabular form giving frequencies and percentages at univariate level and Pearson chi square was used to give the relationship between the place of residence and accessibility to social media using stata. A number of responses were obtained,51% of the respondents were males and 49% were females which indicate that all sexes participated in the study, 40% of the participants were BQE students, 30% were BSTAT students, 20% were BPS and 10% were BBS students, all the students had ever used OTT tax, 44% of the respondents use social media for WhatsApp, 38% use it for Facebook , 8% use it for twitter,70% were accessing social media using Wi-Fi/hotspot, 25 % accessed social media using VPN, 4% paid the OTT tax and 1% accessed it using others,66% were using social media for Education and research purposes, 20% were using it for Entertainment, 10% were using it for communication with family and friends,3% were using it for News and 1% for others , 39% of the respondents were inconvenienced by OTT tax very, 20% were inconvenienced extremely, 18% were inconvenienced slightly, 15% were inconvenienced moderately, the respondents opinions about taxes were summarized into four because the biggest proportion had the same responses; the government should find other ways of financing its expenditures but not taxing everything because it increases the cost of leaving especially for poor people, over taxation since one has to pay for OTT tax after buying data and also the mobile money tax when transacting, they are unfair to the students, government should adjust these taxes in favor of the students, most people do not feel the burden of taxes especially when indirect taxes are used, there should be a clear sensitization of people about taxes before they are effected