22 December 2013

Tanzania: SIM Card Flat Rate Scrapped but Subscribers to Pay More

Dodoma — LOCAL mobile phone subscribers will pay more as Parliament passed The Excise Management and Tariff Bill of 2013, to effectively increase excise duty to 17 per cent from the previous 14.5 per cent.

The move follows President Jakaya Kikwete's decision to scrap the 1,000/- per month flat rate sim card tax imposed during the last budget session of Parliament, but rejected by both mobile phone service companies and consumers as unfair.

Despite the government winning a court battle after mobile phone service companies sought legal intervention over the tax deemed hostile to subscribers and difficult to collect, President Kikwete overuled the tax which would have earned over 178bn/- in revenue during this fiscal year.

Acting Finance Minister, Saada Mkuya Salum told Parliament yesterday that the new excise duty tax increase will enable Treasury to collect 148bn/- starting next January, while an extra 30bn/- will come from service taxes on data, call waiting and others.

"But this tax will only be marginal," Ms Salum said to convince legislators who questioned the rational of increasing the tax burden on subscribers who are already struggling to stay connected.

The acting minister further noted that the new tax model will enable subscribers to pay as per use of the service rather than the sim card flat rate proposal.

"This new tax will enable the government to meet its development budget obligation during the year," Ms Salum noted.

Contributing to the motion, Parliamentary Budget Committee Chairman, Andrew Chenge (Bariadi East - CCM) and shadow Deputy Finance Minister, Christina Lissu (Special Seats - Chadema), supported the government's decision to cancel the sim card flat rate tax because it was not fair on consumers especially low income earners.

"Most consumers use less than 1,000/- per month hence charging them 1,000/- as sim card tax per month was irrational hence the decision to scrap it," Mr Chenge said. He said his committee had initially supported the controversial tax because of the need by the government to reduce donor dependence and meet its budget obligation.

Ms Lissu accused the government of ignoring the legislators' advise against the tax, hence delaying development projects for six months during which mobile phone service companies went to court and eventually the president ordered the bill back to Parliament for amendment.

Lissu further went on to oppose introduction of service tax on auxiliary mobile phone services such as data, call wait, call baring and others saying it will hurt majority of youths.

"Most of the users of such services are youths who also access educational materials online," she argued.

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