Levy relief, yes, but by how much?

Tuesday August 31 2021
Nchemba pic

Finance and Planning minister, Dr Mwigulu Nchemba. PHOTO| FILE

By The Citizen Reporter

Dar es Salaam. To what extent will the government reduce the new rates of the highly unpopular mobile money levy? This is the question on the minds of Tanzanians as Prime Minister Kassim Majaliwa receives recommendations today by a special task force.

This comes at a time when the government has made it clear that President Samia Suluhu Hassan has endorsed a review of the charges.

Speaking in Mpanda District during his three-day working tour of Katavi Region last weekend, Mr Majaliwa said President Hassan had approved the review proposals, adding that the new rates will be unveiled by the end of this month.

As part of efforts to increase revenue by Sh1.254 trillion to help finance the Sh36.68 trillion Budget for the 2021/22 financial year, the government amended the Electronic and Postal Communication Act (CAP 306) in June by imposing a levy of between Sh10 and Sh10,000 on mobile money transactions, depending on the amount sent or withdrawn. A calculation of the charges indicates that sending Sh1 million to someone and having the money withdrawn would cost a total of Sh31,000. The levy, which became effective on July 15, has since been roundly criticised as people believe that the amounts are unrealistically high and fly in the face of the country’s financial-inclusion agenda.

Last month, Finance and Planning minister Mwigulu Nchemba said President Hassan had heard the outcry and had directed the ministry to work on the matter.

He said that, since the levy had become legally-binding after the Parliament approved the 2021 Finance Act and Appropriations Act, the Ministry of Finance and Planning and that of Information and Communication Technology (ICT) will have to work on the regulations, and determine the way forward.

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When he spoke in Dar es Salaam last week, Dr Nchemba said that the government collected Sh48.4 billion through the levy in its first month, and that Sh22.5 billion had been disbursed to the President’s Office, Regional Administration and Local Government (PORALG) for the construction of 90 health-care centres.

He said an additional Sh15 billion was transferred to PORALG for the construction of another 60 health centres, thus bringing the total number of the facilities to 150.

Some Sh7 billion will be transferred to PORALG to finance the construction of 560 classrooms.

And, speaking in Mpanda, Mr Majaliwa reiterated the government’s position on enhancing domestic revenues to enable the government to implement development projects - stressing that the money would be put to good use.

The Tanzania Mobile Network Operators Association (Tamnoa) recently said mobile money transactions had gone down by 45 percent after the levy went into force.

This, Tamnoa said, had adversely affected telecom firms’ revenues - and their overall contribution to government taxes.

Analysts say they expect the rates to go down by up to 50 percent.

Additional reporting by Hellen Nachilongo