The Mobile Operators Association of Tanzania (MOAT) – whose membership includes Vodacom Tanzania; Tigo; Zantel and MTN – has opposed the proposal by the government to introduce a new tax on SIM cards.
In a press release, MOAT states that its members were “not consulted about the Tshs 1,000 (Kshs 54 or US $ 1.16) monthly excise tax on all SIM Cards that was proposed in the 2013 Finance Bill Amendments that were passed by Parliament on Friday June 28, 2013.”
In the release, 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% excise tax on the services offered by the telecommunications 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 Tshs 1,000 monthly charge per SIM Card and in so doing, facilitate further growth of the telecommunications sector in Tanzania. Tanzania has a mobile penetration of about 48 %. This translates to approximately 22 million mobile phone users, out of which eight million spend less than Tshs 1,000 per month on mobile communication,” reads the release.
The tax thus translates to revenues of Tshs 22 Billion or US $ 13.6 million per month to the government.
The Association goes on to say that although it understands the government’s need to access funding for various development initiatives that target the poor, the proposed tax charged per month – which took effect on July 1, 2013 – is contrary to the spirit of growing the telecoms industry and increase mobile penetration as it penalizes the very people who are the focus of these development initiatives and who rely on this service to better their lives.
MOAT projects that its growth over the next decade will come from rural areas and is concerned that the imposition of the Tsh 1,000 monthly charge will deter further expansion in rural areas as the new tax will not encourage the use of mobile communication services among the poor.
The Tshs 1,000, notes MOAT, will also hamper the progress made in the mobile communication sector to date, which has seen services becoming increasingly affordable for all.