Telecommunication firms, brewers and
importers of used motor vehicles are not among those smiling in the government
budget for the 2012/13 fiscal year.
In his speech while unveiling the
2012/2013 budget proposals in the National Assembly last Thursday, the Minister
for Finance and Economic Affairs, Dr William Mgimwa, listed airtime and
abolition of tax exemption on importation of telecommunication towers, ending
an income holiday for the highly active sector. Members of Parliament began
debating the proposed 15.1tri/- expenditure on Monday.
Various observers say telecommunication
services are among basic needs, which are vital for the country’s social and
economic development just like roads, electricity, ports and water supply. "Affordable and reliable telecommunication
for the people is not a luxury, but an essential service and it creates jobs,”
she said.
It is estimated that over 2,500 people
are directly employed by telecommunication companies, while thousands and their
families indirectly depend on the sector. These include agents for various
services like money transfers, airtime voucher vendors and business people who
sell handsets.
"Burdening the service with
additional taxation will not give the country long term benefit, but is going
to adversely affect investment in the sector," said Airtel Director for
Corporate Communication, Ms Beatrice Singano over the weekend when contacted
for comments.
"It has been proved that for every 10 per cent increase in
mobile penetration there is a 1 per cent growth of the gross domestic product
(GDP) of a country," she points out.
She said increased excise duty on
airtime would greatly undermine purchasing power of many people, while
abolition of tax exemption on sites, especially in rural areas might affect expansion
plans. Airtel, Vodacom, Tigo and Zantel have all announced grand upgrading
programmes in a bid to propel the country deeper into the digital world
befitting Tanzanians of the 21st century.
Industry officials announced last month
that Tanzania's mobile phone subscribers rose 22 per cent to 25.6 million last
year, helped by lower tariffs.
Communications is the fastest-growing sector in the country's economy,
with eight players in the local mobile telecoms industry fighting for market
share, forcing tariffs lower.
The Minister for Communication, Science
and Technology, Professor Makame Mbarawa, said last month that phone tariffs
were halved in Tanzania over the past 10 years due to increased
competition.
"There are now eight
licensed mobile phone service providers, with seven in operation. Apart from
widening consumer choice, the increase in the number of service providers has
led to a 50 per cent fall in mobile tariffs," the minister was quoted as
saying.
Interconnection charges, the rate mobile
phone operators charge each other for calls made across networks, fell to 7.16
US cents in January this year from 7.83 US cents in 2008, he said. A new
interconnection rate due to be put in place from January 2013 will be lower,
Prof Mbarawa said.
However, the decrease in
interconnectivity charges, which should have trickled down to lower user
tariffs, had been offset by a volatile local currency. Mobile phone penetration in Tanzania stood at
47 per cent last year, according to the Tanzania Communication Regulatory
Authority (TCRA) website.
TCRA records also show that the number of internet
users in Tanzania rose to 6 million by May this year from 5.3 million at the
end of last year.
There are now fears that the growth rate
could be affected by increased taxation. Ms Singano said that currently, 70 per
cent of Airtel sites in rural Tanzania collects very minimal revenue levels.
"The sites", she added, "are extremely costly to operate due to
logistics and high cost of fuel. Therefore, the reduction or removal of tax
exemption on importation of towers will greatly hamper an operator's ability to
deliver rural coverage to such areas."
"That entire infrastructure is
operated by private business without any government subsidies as is the case in
other sectors," she claimed. She said telephone services are a necessity,
so to impose taxes on such an undertaking is not appropriate.
"Making that
call is a critical part of doing business and everyday life for most people and
specifically in rural Tanzania.
"Farmers, police and livestock keepers’ lives have been made easier
by the use of phones," Ms Singano explained.
People are now conveniently using a
mobile phone to access markets locally and abroad by visiting various websites.
Agnes Sawio, a resident of Area D in Dodoma asked the government to review
taxes on telecommunications companies to make calling rates affordable.
"Its a fact mobile phone companies
have made life easier for the poor. Sending or receiving money has been made
easier, thanks to mobile phone companies", she said. She said that the
government should look for other sources of income, by widening the tax base.
Source: The Daily News,http://www.dailynews.co.tz, reported by John Kulekana in Dodoma
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