Mobile Money Taxation and Financial Inclusion Agenda in East Africa: Is it killing the Goose That Laid the Golden Egg?

This is a critical review paper examining the consequence of mobile money taxation on financial inclusion in the selected East African region countries. The paper involved an in-depth assessment of related literature, and literature was gathered through the Google Scholar and Scopus databases using the “Publish or Perish” search tool. The paper revealed the following; that mobile money taxes questionably discourage both the consumers and service providers, especially considering the multiplicity of taxes facing the telecoms sector; that mobile money-specific taxes may halt consumptions and discourage investment in the mobile sector; that mobile money sector tax affects negatively the spillover effect of mobile money service to other production sectors such as agriculture, healthcare and education; that frequent tax increase could restrict and discourage future investment; that total revenue taxes on operators may discourage more investment on infrastructure and service quality; and taxes on mobile money directly hit poor communities disconnecting them from digital and financial inclusion. These have implications for the attainment of financial inclusion and wider development goals. The paper recommends the governments to consider reducing sector-specific taxation, and minimizing tax-induced obstacles to the affordability of mobile and mobile services, and therefore expanding the tax base with the intention to enhance efficiency. Furthermore, the governments and tax authorities are advised to ensure that mobile money taxes are well designed to ensure that taxation principles are observed, and to make the tax system more conducive and predictable to investment in the mobile sector.