OPINION
The tax the Cameroon Government has imposed on Mobile money in Cameroon, is this yet another way to make the poor poorer?
A tax of 0.2% has been placed on any amount sent or withdrawn and “is applied to all transactions carried out through traceable technical platforms such as internet, mobile phone, wire order, fax or telex. This tax is not applicable to bank transfers and electronic transfers meant to pay tax and customs duties. It is also applicable to cash withdrawals from financial institutions and mobile telephony operators”. My focus is on Mobile money. First, it is important to note that the two main providers of Mobile Money Service in Cameroon (MTN and Orange) already pay various taxes such as Value added tax. These service providers apparently pay administrative fee related to their MOMO or Orange Money service which probably increases the cost of sending or picking up money.
Mobile money, has become the formal chosen service of the poor and struggling masses in Cameroon especially those with no access to other financial services ( also because of the violent conflicts). As at 2017, only 10% of Cameroon’s population reported that they have a bank account. With an economy rooted in Agriculture and mostly in rural communities, 70 percent of the labour force is in Cameroon farms (https://borgenproject.org/credit-access-in-cameroon/). The population depends largely on mobile money.
A World Bank Survey reports that as at 2018, the commercial bank branches per 100 000 adults in Cameroon was 2.2 - 2.2 branches for every 100 000 adults! (https://data.worldbank.org/indicator/FB.CBK.BRCH.P5?locations=CM).
Mobile Money (MOMO) to the struggling population has increased business productivity, stimulated job creation and is booosting economic growth.
In fact, mobile money-driven financial inclusion is a timely intervention in meeting the financial inclusion needs of the poor and struggling masses.
Unfortunately, the success of mobile money services in Cameroon has apparently attracted the attention of the government’s taxation, whose intention appears to be to broaden the Government’s revenue base irrespective of the pain and struggles this brings to the struggling population or with little or no consideration of the impact on those who depend on MOMO. Besides, the taxes typically do not extend to equivalent banking services such as bank checks, bank transfers etc.
As per this new tax, someone, for example, who is a Government teacher in Cameroon will get income tax and other taxes deducted from their salary when it is being paid. If the person further decides to receive their salary via their mobile money account, they will be taxed 0.2% of that money that has already been taxed. And will still be taxed another 0.2% when they withdraw that same money. If they were to use their mobile money account to pay their son’s school fees, another 0.2 percent of same money will be taken off and so on. If that money is used to pay for any other bill through the stated means, it will still be taxed. If the money in the mobile money were to be transferred to a savings account, it will still be taxed. This taxing continues till there is nothing left to be taxed. This is a form or multiple taxation as money being taxed was already taxed.
According to a report from BEAC, mobile money transactions for Cameroon in 2020 totalled 12.151 billion FCFA. I am sure that the government estimates that with a similar volume in 2022, they should make over 24 million FCFA. But this is the case where one transaction is taxed only once. Imagine how much will be made with the multiple taxation.
To the powers that be, what do you plan to do with these taxes for? Is it to build the bad roads that have been major source of accidents? It is for basic health services that have remained far fetched for decades? Is it to support vulnerable people and those living with various disabilities?
Above all, how do the people get to hold you accountable?
This tax on MOMO is not equitable as it is levied every time a transaction is carried out using your mobile money account (but not with other similar services).
The OECD (2014) proposes 4 principles of a well functioning tax system:
1. #Equity. Here, similarly situated tax payers are similarly taxed; this means equally taxing two tax payers with equal ability to pay and any difference accounted for.
Fairness and neutrality appear to be a basic principle of taxation. Taxes should not favour one group over another and must not be designed to influence individual decision making.
By this, this tax appears to be penalising Cameroonians who use mobile money services as opposed to traditional banks. As we all know, this is heavy of struggling populations in remote communities that have limited or no access to basic services including banks. The credit unions that were meant to serve most of them are not even reachable at moment in most of this communities because of a violent conflict that no one is sure of how it will come to an end.
2. #Certainty. By this, the tax payer has certainty to their liability and respective tax burden including when payments should be made. This also includes the concept of tax simplicity.
The imposed tax lacks this certainty as to when payments should be made.
3. #Convenience - the ease with which tax payers are able to comply with the rules and mechanisms of the system. Here, any tax assessment or payment should present #TheSmallest burden possible on the tax payer.
That tax is placing a huge burden on the already struggling population who have no access to traditional commercial banks, which is no fault of theirs but a failure of a system of governance.
4. #Efficiency - both economic and administrative where economic efficiency reflects the balance between revenue mobilisation and economic development/functionality; and administrative efficiency reflects the need for the execution of a tax system that is not expensive and easy to manage.
The negative impact of a tax system must be considered. It is selfish to only thing of how much funds this will bring to the national treasury without consideration of the suffering meted on the people.
What is of concern is if the nuances of how mobile money is situated within the wider Cameroon’s economy is fully understood at policy level in Cameroon. This also makes me to question if some form of policy mimicry isn’t going on - copying policies from other countries and imposing on your people with no sound research and understanding of the realities of your people and how your policies affect them.
In the International Development Community, the importance of an inclusive financial sector is widely known and given priority. Policy makers who genuinely have the best interest of their struggling population at heart will hope, through financial inclusion, to ensure access to formal financial services for the poor and low-income households as a way to enhance their welfare, enable them grasp opportunities, mitigate shocks and ultimately escape poverty.
Access to mobile money services should not in themselves be a source of shock to these struggling masses like the shock brought about by the current tax imposed on MOMO services.
#StopMOMOTax
#PromoteTaxEquity
#PromoteAccountability