Focus now on bank service charges after levy reduction

Dar es Salaam. With the government already working on regulations to scrap some bank service levies and reduce those imposed on mobile money transactions, Tanzanians should not have very high expectations as charges levied by service providers remain exorbitant.

This was evident in Parliament in Dodoma yesterday at almost the same time senior Finance and Planning ministry officials were explaining the government’s decision to media editors in Dar es Salaam.

Presiding over parliamentary proceedings in the House, Deputy Speaker Mussa Zungu said there was a syndicate that had been deliberately set up to discredit the government’s decision to collect levies on electronic financial transactions while disregarding those collecting much more.

He said it was unfortunate to note that Tanzanians were only complaining about government levies, but were at the same disregarding “colossal” sums raked in by telecommunication firms and commercial banks through “exorbitant” charges.

“This must be regulated. When you transfer money, commercial banks get much more than what the government does,” he said, adding that what the government was collecting went into the construction of classrooms and health centres.

“So, in short, there is a syndicate that is there to oppose what the government is doing, while these are the same people who take the lion’s share of the money,” said Mr Zungu, who is also the Ilala MP.

He asked the government to come up with a mechanism of regulating fees and commissions that commercial banks charge on transactions in order to reduce the burden on consumers.

“Consumers must also cultivate a culture of critically analysing the breakdown of fees deducted from their money whenever they make electronic transactions in order to understand how much commercial banks and telecommunication firms collect from them,” he said.

Mr Zungu’s comments followed Tuesday’s decision by the government – through Finance and Planning minister Mwigulu Nchemba – to scrap levies on transactions not exceeding Sh30,000 with effect from October 1.

Dr Nchemba said the government would remove levies on withdrawals of up to Sh30,000 made through bank agents and automated teller machines (ATMs).

The government will also come up with new levy rates for mobile money transactions to mitigate the impact of the high cost of living on Tanzanians.

Dr Nchemba said the scrapped levies will also include those on money transferred from bank accounts to mobile networks, money transferred within the same bank and money transferred from one bank to another. The government also announced a 10 percent to 50 percent cut on mobile money transaction costs. Currently, the maximum levy stands at Sh4,000.

Explaining the new development to journalists in Dar es Salaam yesterday, the assistant commissioner for policy analysis in the Ministry of Finance and Planning, Mr William Mhoja, said new regulations would soon be announced to effect the changes.

He said it was also important for Tanzanians to be aware that the government will only touch on those areas that were directly going to its coffers and leave those charged by commercial banks, their merchants and telecommunication firms untouched.

With the opposition to the levies, Mr Mhoja said, the government was still open for discussions on how best to implement the revenue collection mechanism so that Tanzania’s development tempo remains steadfast.

“We are still open for discussions,” he said, responding to journalists’ questions on the possibility of dropping the levies altogether and sticking to collection of taxes.

It has been a widely held view that levies are tantamount to double taxation because it is deducted from the salary on which the Pay As You Earn (Paye) Income Tax was applied before it was deposited into an employee’s bank account.

The decision to drop some levies and reduce some has, however, been positively received by some analysts in the country, with some economists and businesspeople saying it was a good move.

“What the government has done is commendable. The goal of any government on the globe is to bring a relief to its citizens and not otherwise,” an economist from Mzumbe University, Dr Daud Ndaki, told The Citizen on Tuesday.

And, his University of Dodoma counterpart, Dr Lutengano Mwinuka,said: “By doing away with double-taxation, I am optimistic that it will stimulate economic activities”.

Businessman Azim Dewji congratulated the government for the move, saying however there was an urgent need for the government to introduce courses on payment of taxes and levies right from primary schools.

“By working on the grievances, the government has sent a message that is actually listens to its people. Mama (President Samia Suluhu Hassan) has listened to decided that there is need for a review. This is a very good move,” said Mr Dewji when he spoke to The Citizen yesterday. He said scrapping some levies and reducing some was a clear testimony that the government can listen despite the fact that it [the government] needs the money to implement development projects as explained on several occasions.

He said Tanzanians need to understand that levies were not a new thing that whenever they pay for their bills like electricity and others, they also pay levies in different forms.

“Levies are important. I have not seen a person congratulating the government for scrapping school fees (from Standard One to Form Six) and examination fees. As Tanzanians, we all need to contribute towards this….Tanzanians need to be educated on these issues,” he said.