What the electronic tax stamp tender means to you
Calculations by the Parliamentary Budget Committee show that prices of bottled mineral water, soft drinks, spirits and beer will rise by between Sh13.5 and Sh29.57 per litre if the producers decide to factor in the costs of the electronic tax stamp.
What you need to know:
Calculations by the Parliamentary Budget Committee show that prices of bottled mineral water, soft drinks, spirits and beer will rise by between Sh13.5 and Sh29.57 per litre if the producers decide to factor in the costs of the electronic tax stamp.
Dodoma. The introduction of electronic tax stamps will result in a Sh13 rise in prices of products, MPs say, blaming the government for issuing the tender to a Swiss firm despite its ‘expensive price’ offer.
Calculations by the Parliamentary Budget Committee show that prices of bottled mineral water, soft drinks, spirits and beer will rise by between Sh13.5 and Sh29.57 per litre if the producers decide to factor in the costs of the electronic tax stamp.
This, MPs say, will ruin the government’s intention of containing the prices of the products by maintaining the existing excise duty rates during the coming financial year.
“If we estimate that the electronic tax stamp will be charged on the unit price and not on the volume of litres sold, then a 500 millilitre (ml) bottle of beer will attract Sh22.73 while a 500ml bottle of soft drink will attract Sh13.5 per litre. A 1000ml bottle of spirit will attract Sh29.57 per litre in electronic tax stamp,” the committee chairperson, Ms Hawa Ghasia, said on Monday.
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 and has been offered a five-year contract by the government.
The self-financing model requires the company to recoup its investment by charging the costs for an electronic tax stamp on every product that is produced.
Tabling Tanzania’s Sh32.5 trillion budget for the financial year 2018/19 in Parliament on Thursday, June 14, Finance and Planning minister, Dr Philip Mipango, said the electronic tax stamps will be introduced from September 1, 2018.
He said the new tax stamp system would enable the government to use a modern technology to obtain production data in real time from the manufacturers.
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.
But MPs say with only an investment $21,533,827 (about Sh48.5 billion), the Swiss firm will be leaping billions out of the country.
‘If the volume of litres of beer, drinking water and soft drinks as well as the number of cigarettes is put into consideration, this firm 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 million only,” she said.
And, debating Dr Mpango’s Sh32.5 trillion budget proposals in the House yesterday, Mr Mussa Azzan Zungu (Ilala - CCM), said the government that by giving the tender to the Swiss firm, the country was surrendering its tax collection sovereignty to a foreign company.
“Since the server will remain the property for the Swiss firm, we will simply be surrendering our tax regime to a foreign company for a period of five year,” he said, proposing that the task be undertaken by the government through its own agencies.
He said the government may not have conducted proper due diligence in the tendering process, alleging that the Swiss firm has a case in Morocco and that the price it offered to Tanzania is ten times more than the usual ones.
In Kenya, he said, the company has been the subject of a probe by the Parliamentary team.
According to Mr Suleiman Saddiq (CCM - Mvomero), the problem with the company is that it will result into price increases if manufacturers decide to factor the costs in.
“Did the government really tell this company the truth about the volume of bottled mineral drinking water, soft drinks, beer and spirits when negotiating the deal?” he wondered.
