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Govt Reviews Electronic Levies As Resistance Against Them Refuses to Die

The government says the move to review the levies was influenced by the desire to discourage cash economy in Tanzania.

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Dar es Salaam. Finance and Planning Minister Mwigulu Nchemba said Tuesday that effective from October 1, 2022, no levy will be imposed on wire transfers as the government works out a plan to implement the directive from the ruling Chama cha Mapinduzi (CCM) on the need to review the contentious electronic levies.

There is also going to be no levy charged on internal bank transfers and no levy on transferring money from banks to mobile networks. Also, no levy will be charged on bank withdrawal through ATMs for all transactions below Sh30,000.

Dr Mwigulu said as is the case now the levies will also not apply to small-scale entrepreneurs. The government is also reducing the levies between 10 per cent and 50 per cent depending on the category to which the respective levy belongs.

The government will also abandon the current arrangement where a tenant is supposed to pay the property tax on behalf of their landlords, with  Dr Nchemba pointing out that it is the duty of the landlord to pay relevant tax based on the income earned due to renting.

“The government made these reviews in order to encourage the use of electronic transactions and thus reduce the extent to which financial transactions are carried out in cash,” Mr Nchemba told lawmakers in the capital Dodoma.

The government’s attempt to discourage the cash economy comes at a time when reports indicate that more and more people have stopped using mobile transaction services since the levies were introduced in July 2021.

Vodacom Tanzania, one of the country’s leading mobile operators, reported earlier this month that the leading mobile financial services provider recorded an Sh103 billion loss in revenue due to levies.

The company’s board chairperson, Thomas Mihayo, was quoted as saying in the company’s annual report deposited with the Dar es Salaam Stock Exchange (DSE): “The introduction of mobile money levies in the year was an unfortunate development for financial inclusion in Tanzania.”

A survey by Twaweza, a regional organisation working on issues of governance, also showed that only 43 per cent of people who took part in it said that levies on mobile money transactions are a good thing.

Tuesday’s announcement followed a directive CCM gave on September 8, 2022, demanding the government work on raised concerns around the issue of electronic levies.

“[The party] has directed the government to assess the reality [around the levies] and take necessary measures based on citizens’ views on the levies,” CCM secretary of ideology and publicity Shaka Hamdu Shaka told journalists during a press conference which took place at the party’s mini-office in Lumumba, Dar es Salaam.

On Tuesday, Mr Nchemba was explicit in his acknowledgement that the latest round of reviews on the electronic levies is thanks to the intervention by the second longest-ruling party in Africa.

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