28th July 2013
Taxing sim card use at Sh1000 per month is negative
as it taxes most intensely the poorest sections of society, which is
contrary to due diligence in taxation practices, a tax expert with the
Economic and Social Research Foundation (ESRF) has affirmed.
Atromius Mbilinyi, a taxation professional
and researcher with the foundation, made the remarks as the Treasury
announced that it had suspended the tax measure, instituted by
parliamentary pressure during the Budget session in April-June.
The Treasury took the step after President
Jakaya Kikwete directed Treasury and the Ministry of Communications,
Science and Technology to liaise with the service providers to sort out
complaints about applying excise duty to sim cards.
Finance Minister Dr William Mgimwa
emphasised following a meeting with service providers that it is MPs who
instituted the tax so as to add to budgetary funds for various priority areas.
Now, it is mostly likely that the
government will revisit its decision by reviewing the Finance Bill 2013
that was passed in Parliament a month ago.
“Taxation principles require every one to
be taxed according to his or her means of income, implying that high
income earners should pay more tax compared to low income earners,”
Mbilinyi said..
A negative tax is one which is regressive,
a taxation arrangement that takes a larger percentage of lower-income
earnings and a smaller percentage of higher incomes.
The researchers have proposed the new
method of charging mobile which is under taxation principles and will
not hurt low earners.
In the 2013/2014 budget, the government
placed a Sh.1, 000 monthly tax liability on the use of mobile phones so
as to collect Sh. 178bn from 22 million holders of sim cards.
Mbilinyi said the government will not meet
its plan of collecting that amount as about eight million sim card
holders use less than Sh1000 to recharge their mobile phones each month,
eliminating 36 per cent of registered sim card users from routine
recharging of such phones.
Collecting taxes by using airtime topping
up is a better method and would collect greater tax amounts, the
researcher noted, challenging the government t o find a technology which
will help them to monitor air time sold by mobile operators, thus
ensuring that relevant taxes are properly paid.
Mobile phone
operators who spoke to the Guardian on Sunday this week stated that
excise would make them lose customers as rural customers will be hardest
hit. Most of them only marginally buy airtime vouchers
There are customers who stay for three months without buying airtime voucher
while some are unable to make calls and instead rely on beeping, which
eliminates their being able to pay a monthly fee of Sh. 1,000 as tax.
A Vodacom official said that 48 percent of
the total country’s population use mobile phone, about 22 million where
eight million buy airtime vouchers and make calls. The tax measure
would lead to deregistering close to 14 million subscribers,,
representing a huge loss to mobile phone firms.
On Tuesday this week, President Jakaya
Kikwete directed telecom firms, the Treasury and the Ministry of
Communication, Science and Technology to resolve the on-going wrangle.
He directed experts from the ministries
and the Mobile Operators Association of Tanzania (MOAT) to look for a
solution on how to settle the Sh. 178 billion gap is that excise tax is
scrapped.
The President noted that, it was
impossible to drop the tax without finding optional sources of revenues
to cover the deficit in the budget and the finance Act that has already
been enacted.
MOAT spokesperson Sylvia Balwire declined
comment when contacted on Thursday, and instead she sent a message which
was relayed by an unidentified lady at a customer care counter in her
office who told this reporter to contact the State House.
Meanwhile, a survey by The Guardian with
the five mobile phone companies indicated that none of the firms had
started implementing the deductions to meet excise tax remittances per
month to the Tanzania Revenue Authority (TRA), which would be Sh. 33.40
per day of airtime or accumulated airtime liability. The surveyed firms
are Vodacom, Zantel, Tigo, Airtel and TTCL Mobile.
source: IPPMEDIA
