Tanzania: Rethink of New Mobile Phone Levies, Govt Asked

Stakeholders have expressed worries about new levies on SIM card and mobile money transactions proposed in the 2021/22 national budget, saying they will destabilize low income earners and hold back efforts of incorporating them in financial inclusion.

Instead, they have advised the government to create an additional friendly environment to enhance internet penetration and enable more data to become affordable to attract more users and in turn, be a source of more revenue collections.

The remarks were made by the panellists Edmund Munyagi, the Personal Finance Coach and Trainer and Lawrence Mlaki, Founder at Lase Financial services Limited at the discussions with editors from various media organisations on the 2021/22 national budget in Dar es Salaam over the weekend.

Elaborating, they commended the government for proposing exemption of Value Added Tax on smartphones, tablets and modems to drive up internet use and enhance its penetration in the country.

In a way, the move reflected how the government planned to increase the number of internet users to 80 per cent by 2025 from 46 per cent currently, and this will enable more revenue collections instead of imposing levies.

According to Tanzania Communication Regulatory Authority (TCRA), internet users reached 29 million in March this year representing a yearly increase of 8.3 per cent from 26 million internet users in March last year.

However, Mr Munyagi said imposing levies on SIM card and mobile money transactions is likely to make people turn to informal ways of money transfer.

"The government move is likely to discourage efforts to enhance financial inclusion as well as hurt telecom industry's contribution to the economy," he said.

There is already an excise duty paid on every mobile money transactions and thus the proposed levies may look like double taxation.

Further, the new levies on SIM card and mobile money transactions are likely to make the use of mobile phones more expensive. "To attract more people to use the mobile money services, they must be made cheap and affordable," he stressed.

The new SIM tax will raise the cost of mobile services and push the affordability barrier even further, making it even more difficult for low-income households to access mobile connectivity.

Through the 2021/22 budget tabled in the Parliament last week by the Finance and Planning Minister Dr Mwigulu Nchemba, the government proposed a levy of between 10/- to 200/-per day and per SIM card depending on the ability of the user to recharge the balance.

The government also proposed a levy of between 10/- to 10,000/-in each mobile money transaction of sending and withdrawing.