Bunge puts Swiss firm on the spot over electronic stamp tender

Dodoma. The introduction of electronic tax stamps may have excited some taxpayers but the manner in which the tender for the task was awarded to the Swiss firm has raised eyebrows of a Parliamentary Committee.

A Swiss company which deals in security inks for currencies and other sensitive documents including identity cards, passports, transport and lottery ticket, SCIPA, has won a tender to rollout the electronic tax stamp system in the country.

According to the Parliamentary Budget Committee, SCIPA was awarded a five-year contract by the government to rollout the electronic tax stamp system on a self-financing model.  

“The self-financing model requires the company to recoup its investment by charging the costs for an electronic tax stamp on every product that will be produced,” said the Parliamentary Budget Committee chairperson, Ms Hawa Ghasia.

Tabling Tanzania’s 32.5 trillion budget for the financial year 2018/19 in Parliament on Thursday, June 14, the Finance and Planning Minister, Dr Philip Mpango said the electronic tax stamps will be introduced starting September 1, 2018.

“The new tax stamp system will enable the Government to use a modern technology to obtain production data on timely basis (real time) from the manufacturers,” he said.

He said the move is also intended to curb revenue leakages and make it possible to determine in advance the amount of taxes to be paid namely Excise Duty, Value Added Tax (VAT) and Income Taxes.

Dr Mpango said the system will address the challenges associated with the use of fake paper stamps including the sub-standard products which may result into health problems and revenue loss.

But the Parliamentary Budget Committee said in Parliament on Monday, June 18, 2018 that much as it supports the need for such a system the money that the Swiss company will be collecting does not match with what it has actually invested.

According to Ms Hawa Ghasia, the Swiss company is expected to invest $21,533,827 (about Sh48.5 billion) but it will be collecting billions of shillings each year.

An analysis, undertaken by the Parliamentary Budget Committee, shows that SCIPA will be collecting a total of Sh66.69 billion each year from consumers of water, cigarettes, soft drinks and beer as electronic stamp duty.

“This amount is too much for a company that has invested just Sh48.5 billion only,” she said.

The Parliamentary Committee is proposing that the government should invest its Sh48.5 billion so that the money that would go to SCIPA would become part of government revenue.

The committee says it makes little sense for the government to hire a company while it has been emphasizing on removing middlemen in the collection of its revenues.

“The government moved its monies from commercial banks to a single account at the Bank of Tanzania. It also moved the LUKU purchasing system from MaxMalipo to the Government Payment Gateway Payment System….The committee sees that the government had no basis for giving a tender to SCIPA while it can do its own tax audit,” she said.