Government softens stance on sim card charges

 

Dar es Salaam. The government has finally softened its stance on tax charges on sim cards and opened up to talks on whether or not to withdraw it.

Finance Minister William Mgimwa declared yesterday that public and private stakeholders were free to submit their views on how the issue could be best handled. But he cautioned that since the Sh1,000 tax was aimed at raising about Sh160 billion to help address rural poverty, the discussion should be directed at identifying alternative sources of revenue.

“Citizens and other stakeholders who think that the charges on sim cards are a burden, let us talk,” said Dr Mgimwa.

The revenue from the sim card tax is intended to fund rural development in areas that will enhance production such water services, electricity and infrastructure. “That is why the government decided to accept parliament’s proposal,” Dr Mgimwa explained.

The sim card tax is one of the items that were discussed by the Parliamentary Budget Committee and all that the government can do is work out how to implement it.

The minister disclosed that, due to public pressure to drop the tax, the government intends to give the public an avenue to discuss the move.

The sim card tax reportedly found its way into 2013/2014 Finance Act after the parliamentary committee’s discussions with tax experts, but mobile operators and other interested parties still feel sore that the government did not consult more broadly before imposing the charge.

The pressure has now shifted to the ruling Chama cha Mapinduzi, which has issued a statement in support of withdrawal of the tax.

CCM Secretary for Ideology and Publicity Nape Nnauye was quoted in the local media saying that regardless of the importance of the charges, the criteria used to determine the amount did not consider the financial circumstances of the people. “The ruling party cannot remain quiet on an issue that is a burden to the citizens and will hinder development and delay efforts to improve lives,” Mr Nnauye said.

Members of Parliament have also opposed it and gone ahead to question how the tax got into the Finance Act when it was supposedly not presented to the House for discussion. Shadow Finance Minister Zitto Kabwe said it was illegally included in the Act as it was not in the minister’s speech that MPs debated.

Some parliamentarians have threatened to mobilise the public to oppose the tax. Musoma village MP Vincent Nyerere, who is planning a public rally, said he is soliciting the support of his people.

Presenting the 2013/2014 budget speech, Dr Mgimwa told the House that revenue collection up to April 2013 was partly boosted by raising excise duty on mobile phone airtime. He also asked the House to consider his tax proposals for 2013/2014, which include introducing withholding tax of 10 per cent on the commission chargeable on mobile phone money transfer.The minister also asked parliament to accept excise duty on all mobile services at 14.5 percent instead of airtime only. Of this sum, 2.5 percent will go to finance education.