Why Tanzania taxpayers should brace for 'more pain'

Wednesday June 16 2021

Finance and Planning minister Mwigulu Nchemba, presenting the budget in Parliament on Thursday/. PHOTO| FILE

By Gadiosa Lamtey

Dar es Salaam. Tanzanians should brace for surprises come July 1, 2021 when the government switches to new taxation rates in its efforts to collect Sh36.3 trillion that makes the budget for the 2021/22 financial year.

According to some pundits, part of the budget carries items aimed at stimulating economic growth following Covid-19 impacts, but, they argue that there are also painful surprises to be expected, especially with regard to areas that directly touch lives of common Tanzanians.

While memories of Tanzanians are still fresh with how abrupt data bundle price adjustments raised a huge public uproar in April, a repetition could be witnessed as the government seeks to raise its collections on Subscriber Identification Module (SIM) card and on mobile money transactions.

Presenting the budget in Parliament on Thursday, Finance and Planning minister Mwigulu Nchemba said the government would impose a levy of between Sh10 and Sh200 per day per SIM card depending on the ability of the user to recharge the balance in an effort to increase revenue collections by Sh396.306 billion during the fiscal year.

The government was also proposing the amendment of The Electronic and Postal Communication Act, CAP 306 with a view to imposing a levy of between Sh10 and Sh10,000 in each mobile money transaction of sending and withdrawing. This is geared at collecting Sh1.254 trillion.

The pundits say with no signs that Parliament could drop the proposal, eyes should now be directed at whether or not the money will surely be spent on the intended projects, which are: Tanzania Rural and Urban Roads Agency (Tarura), standard gauge railway (SGR) and Rural Water Supply and Sanitation Agency (Ruwasa).


“This debate has not yet been given enough attention and the money that the government expects to collect from the public is huge. I don’t see any sign of this bill being changed so we can only direct our energies on ensuring that the money goes to the intended projects,” said the ACT-Wazalendo Party Leader Zitto Kabwe.

Mr Kabwe, an economist by profession, made the suggestions yesterday when he visited Mwananchi Communications Limited (MCL) headquarters.

He said there had been a tendency for the government to collect money from the public for the purpose of certain development projects but at the end of the day the money ends up doing other things.

“In order to ensure that these funds are used for the intended purpose we could need an audit which will produce a report from time to time on how Tanzanians’ funds have been utilised in implementing those projects,” he said.

The Finance Bill, 2021 did not help matters on the subject matter because it left the issue to be decided by the Minister for Information and Communication Technology and his Finance counterpart to make regulations prescribing the manner and modality under which the levy may be collected and accounted for.

Some Members of Parliament who debated the budget and the Finance Bill, 2021, yesterday expressed their hope that the government was up to stimulating economic growth through incentivising agriculture, fisheries, livestock and manufacturing sectors among others.

Ahmed Shabiby (Gairo - CCM) said he found no problem with the SIM card tax.

“I find nothing bad with it. It is not bad for a Tanzanian to contribute towards the good of his/her country. It’s unfortunate that people cannot understand this and that is why we see the media reporting time and again about the Sh200. If you do not understand something, stop discussing it and if you oppose it, bring us another option,” he said.

Ms Esther Matiko (Special Seats) said the money to be collected was huge and thus the need for it to be ring fenced so that it can fully go to finance the intended projects.

Mr Cosato Chumi (Mafinga Mjini-CCM) assured Tanzanians that their interests in the mobile money transaction agenda would be taken care of by the lawmakers.

During his discussion with MCL journalists yesterday, Mr Kabwe applauded the government’s decision of paying the debt owed by pension funds, saying it would help the funds to invest more.

He said the PSSSF, for instance was owed by the government Sh8 trillion as of 2014. Part of the money went into the construction of various projects including University of Dodoma while part of it was for retirees.

“In this case the government should make it clear on whether it would pay all the money or only in small amounts,” he suggested.

On the issue of property tax which the government is proposing that it now be paid through electricity billing system, Mr Zitto was of the view that it [the government] should first admit that it made a mistake when it shifted the task of collecting the tax from Local Government Authorities to Tanzania Revenue Authority (TRA).

He proposed that the government should immediately meet with tourism stakeholders and see how they can rescue the sector that has been devastated by the Covid-19 pandemic and whose recovery is still miles away.