Parliament yesterday scrapped the controversial sim card tax and agreed to raise excise duty on telecommunication services by a further 2.5 per cent. The move will raise internet costs and puts to an end six months of confrontations between wananchi and pressure groups and the government.
The intention of mobile phone companies, which also opposed the sim card tax and moved to court to block TRA from imposing it, came into question as MPs revealed that the firms had agreed to “donate” Sh30bn to the government in return.
The fate of the court case, now with the Revenue Appeals Tribunal, remains unclear as the move to scrap the tax means there will be no reason to go to court. The firms lost the first case at the Tax Revenue Board and lodged an appeal last week. But even as the MPs approved the Excise Management and Tariff (Amendment) Bill 2013, they warned the government about its tendency to ignore advice on matters that touch on the lives of the people.
The amendments moved by the Finance deputy minister, Ms Saada Mkuya, dropped the Sh1,000 monthly sim card tax, subjecting the government to a Sh148 billion deficit in revenue collection projections.
To compensate for this, the government proposed a rise in excise duty on telecommunication services from 14.5 per cent to 17 per cent.
According to Ms Mkuya, the higher excise duty should enable the government to net Sh148 billion. The mobile telecommunication industry has agreed to give the government the Sh30 billion balance. But MPs have raised questions over the generosity of the companies that, only few months ago, said they were incapable of collecting the Sh1,000 sim card tax on behalf of the government.
“Why, all of a sudden, have the companies become so generous that they have volunteered to give the government Sh30 billion when it is the same companies that were protesting the sim card tax?” asked Mr Rajab Mbarouk Mohammed (Ole–CUF).
Other MPs opposed the excise duty hike, noting that though they wanted the government to raise money for water and electricity in the rural areas, the move would add to the burden of Tanzanians.
“During the budget we opposed the increase to 14.5 per cent because it would hurt poor Tanzanians,” said Ms Christine Lissu as she tabled the opposition speech, “but today the government wants to raise it to 17 per cent while the rate does not exceed 12 per cent in the rest of East Africa.”
Mr Salehe Pamba (Pangani–CCM) said the government needs to get into the habit of involving stakeholders before making decisions, especially on taxation issues that directly affect the people.
Mr James Mbatia (Nominated–NCCR-Mageuzi) said the sim card tax conflict is evidence of how uncoordinated the government is.
“It is amazing that the Finance minister (William) Mgimwa, who backed the law that introduced the sim card tax, disowned the same law a few days after the protests started,” he said.