Uganda Said It Would Ban VPNs To Prevent Users From Dodging Its Absurd New Social Media Tax: Guess How That Worked Out?

from the OK,-we'll-just-tax-everything-instead dept

Three years ago we wrote about African countries that thought taxing blogs and social media was an easy way to raise money -- and to muzzle inconvenient voices. A year later, Techdirt was reporting on a sudden boom in VPN use among Ugandans keen to avoid that country's levy on social media use. As Karl Bode reported, back then the authorities were pressuring ISPs to ban the use of VPNs. A post on the Rest of the World site has a useful update on how things have worked out since then. First, the money:

after three years, the tax, which amounts to about 5 cents (200 Ugandan shillings) per day to access any of more than 60 social media platforms, has failed. It has neither helped the government raise significant revenue nor curtailed lively online discussions by young Ugandans.

In its first fiscal year, the Ugandan government was projected to collect about $77.8 million (248 billion Ugandan shillings) from social media tax. Instead, it raised only about $13.5 million (49.5 billion shillings). In the next fiscal year, Uganda lowered its expectations and projected to collect $16.5 million but only just slightly beat its target by raising $18.7 million.

The reason, as expected, is that people are turning to VPNs, often the free ones, despite the intrusive pop-up ads and questionable security. It turns out that it's harder to ban VPNs than the government thought. So the Ugandan authorities have come up with Plan B:

Thanks to VPNs users have found a way around the social media tax. That's why, on April 29, the government replaced the social media tax with a 12% excise duty on internet data that will likely hike the cost of internet access in the landlocked country that already has some of the highest internet costs in the region.

The idea here is presumably that even if people use VPNs, they will have to pay the data tax. That will probably work, but the move brings with it a huge problem. It will make using the Internet for any purpose in Uganda more expensive, which will not only discourage ordinary people from taking advantage of it, but will also throttle Ugandan online startups. However much the new tax brings in, it is likely to be far less than the deeper economic harm this short-sighted move will inflict.

Follow me @glynmoody on Twitter, Diaspora, or Mastodon.

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Filed Under: blogs, commentary, free speech, internet taxes, social media, uganda, vpns

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  1. identicon
    Anonymous Coward, 7 May 2021 @ 5:46pm

    It's pointless to comment on this internet tax without first understanding:

    • How the gov't sources revenue overall: Is there an income tax? VAT or sales tax? Corporate tax?

    • What's the internet access situation: Is there a monopoly or oligopoly, resulting in high costs? Or, are there many competing service providers, so costs are low?

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