As the reality of the proposed monthly excise SIM Card tax bites in, the telecommunications sector and Tanzanians at large are set to face a hard time in future.

The Tshs 1,000 excise tax, imposed by the 2013/2014 Finance Act, was to be implemented on 1st July 2013.

To what extend will the damage hit the market? According to a statement released by Mobile Operators Association of Tanzania (MOAT) recently, Tanzania has a mobile penetration of about 48 percent, translating to approximately 22 million users.

Out of this, 40-45 percent of Tanzania telecom users will be cut off, meaning that the Tshs 1,000 excise tax on all SIM Cards will affect 8 million of the current customers in the country, whose usage on mobile communication is less than Tshs 1,000 a month, and deter them from using the service.

The statement goes on to say that the Tshs 1,000 excise tax will hamper the progress made in the mobile communication sector where we have seen services becoming increasingly affordable for all. 

This will further put at risk all the rural expansion initiatives, as those championed by the Universal Communications Services Access Fund (UCSAF), because the very same people who spend less than Tshs 1,000 per month, and are the beneficiaries of this fund, will not be able to afford our services in such areas.

The Tshs 1,000 charge per month will also hamper the progress made in the mobile communication sector to date, which has seen services becoming increasingly affordable for all, the statement read.

It is clear that President Jakaya Kikwete rejected this tax, and has been on the forefront to have it suspended.

Among the actions the president took was to constitute a constitutional committee to discuss this. The committee, which included the Ministry of Finance, Tanzania Revenue Authority (TRA) and representatives from telecom companies, compiled a proposal that was later submitted to the Deputy Minister for Communications, Hon. Janet Mbene. It is evident that after the submission, no steps have been taken to date.

At the same, the SIM Card Bill was not presented at the first reading of the budget, but rather was sneaked in by the budget committee led by Hon. Andrew Chenge, Chairman Parliamentary Budget Committee.  

The tax man on September 12 gave telecommunications, Vodacom, Tigo, Airtel, Zantel and TTCL, companies a 14-day ultimatum to remit the tax, which was due on July 1, or face penalties.

But on Friday last week, the companies separately moved to court and lodged injunctions with the Tax Revenue Appeals Boards, a move that aimed at stopping TRA from collecting the Tshs 1,000 excise duty charge.  Should they agree to pay the tax, the citizens will be charged Tshs 3,000 for the three months that have so far lapsed.

“It should be noted that penalizing the companies means penalizing the customers. Failure to pay the tax is a criminal offense. But will the government file criminal charges against the citizens who are unable to pay the tax every month? Companies will also not be able to rollout network services since our target customers will be disconnected,” MOAT said in a statement.