NEW taxes on financial service fees and mobile money transfer charges have sparked undue tension among members of the public, but mostly due to politically instigated propaganda.
Finance and Planning Minister, Dr Philip Mpango, presenting the 2016/17 national budget here on Wednesday, proposed Value Added Tax (VAT) on fee based financial services, a move he said will widen the tax base and increase government revenue.
Dr Mpango also proposed extension of 10 per cent excise duty on charges or fees payable by people to telecommunication service providers in respect of money transfers to cover all commissions received in the provision of mobile money services.
Surprisingly, suspended Kigoma Urban Member of Parliament (MP) on ACT-Wazalendo ticket hurriedly posted on his face book page, claiming that effective July 1, the Tanzania Revenue Authority (TRA) will deduct 280/- for every 1,000/- transferred through mobile phones or withdrawn through banks’ automated teller machines (ATMs).
In his post that went viral, igniting heated debate and emotions in social media, Mr Kabwe wrote, “In each 1,000/- you will withdraw through ATM effective July 1, 2016, Tshs 280/- will be taken by TRA.
The same applies to MPESA, TIGO PESA transactions.” For the whole of Thursday and yesterday, the ‘Daily News’ Newsroom was awash with calls from worried members of the public seeking clarification over the issue.
But, far from the politically motivated post by Mr Kabwe, the proposed taxes on financial service fees are not that harsh. According to the budget speech, the VAT is proposed on the charges that banks put on the services they provide to their customers - ATM withdrawal fee, ledger fee and counter withdrawal fee, among others.
If, for instance, the banks currently charge 500/- per ATM transaction, effective July 1, 2016, the bank customers will have to part with 500/- as the bank charge and 90/- as the 18 per cent VAT tax, bringing to 590/- the total charge per ATM transaction.
And the charge, which excludes interest on bank loans, has nothing to do with the amount of money transacted. But, under the proposed 10 per cent excise duty on charges/fees of mobile money services, the tax burden falls on the telecommunication firms, which earn the service commissions.
According to the budget speech, if the telecommunication firms, for example, charge 3,500/- for transfer of 200,000/- through mobile phones, effective July 1, 2016, the companies will charge 3,500/- but part with 350/- as 10 per cent excise duty to TRA and remain with 3,150/- as their net commission for the transaction.
Yet, Mr Zitto is deceitfully implying that the government intends to subject all amount of money transacted through mobile phones and ATMs to 28 per cent tax, which is close to the 30 per cent corporate tax that companies pay on their net profits.
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