Tax on sim cards here to stay, insists Mgimwa

The decision to slap a 1,000/- monthly excise tax on every SIM card as passed in the 2013 Finance Act had the blessings of Parliament and taxation experts, Finance minister said yesterday.

Dr William Mgimwa said in Dar es Salaam that the tax found its way into Tanzania’s 2013/2014 budget after it was proposed to the Parliamentary Budget Committee after thorough discussions with tax experts.

“It was MPs who proposed that we take the tax aboard…tax experts were also consulted,” he said shortly after signing notes for development financing from the Swedish government.

Dr Mgimwa’s response comes at a time when some quarters, including MPs, have been raising questions over the way the tax found its way into the budget even as the same was not in the minister’s budget speech tabled before Parliament.

On his Facebook page, the Shadow Finance minister, Mr Zitto Kabwe, termed the tax as unfair, saying it has been illegally included into the Finance Act because it was not in the minister’s speech which MPs debated.

Besides, Mr Kabwe says charging a flat 1,000/- each month on every Sim card was unfair because it supposed that both the rich and the poor will pay equally without considering their income differences.

And yesterday, the Mobile Operators Association of Tanzania (Moat) joined in the fray, saying they were not consulted in the process of slapping the 1,000/- monthly excise tax on Sim cards.

In a statement issued to the media, Moat said it met with the Parliamentary Budget Committee in Dodoma on June 20, 2013 to seek clarity on the definition of telecommunication services as stipulated by the draft 2013 Finance Bill following the government’s move to impose a 14.5 per cent excise tax on  the services offered by the sector.

At the time of the meeting, telecommunication services were defined as: a service of any description provided by a telecommunication company by means of any transmission, emission or reception of signs, signals, writing, images and sounds or intelligence or information of any nature, by wire, optical, visual or other electromagnetic means or systems.

“We were, therefore, as mobile operators not a party to the discussion on the introduction of this new tax. We call upon the government to re-consider the Sh1,000 monthly charge per Sim card and  in so doing, facilitate further growth of the sector in the country,” the association said in a statement.

 Tanzania’s mobile penetration stands at 48 per cent. This is about 22 million mobile phone users, out of which eight million spend less than Sh1,000 per month on mobile communication, according to Moat.

Moat argues that while government needs funds for various development projects, the Sh1,000 charge -- which became effective on July 1 -- is a penalty to the very people that are at the target of the development.
Source: The Citizen, reported by Alawi Masare from Dar es Salaam, Tanzania
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