Recently, we have noticed a huge wave of e-protests online in social media and various blog posts.
This buzz came to surface once the contents of the famed Budget Speech became public knowledge, and not only that, news reached the mass that the contents of the Finance Bill were enforceable effective July 1st, 2013. Then we started feeling the pinch. Then we started talking. Then we started a process of collecting signatures for a common goal….(a petition) to abolish an item introduced by the Bill.
Are addressing the full scale of the new changes, or this is just the tip of an iceberg, while the ice mass remains unmoved under the water surface?
What is New?
Before we talk about the public outcry, we need to be aware of what are the changes in our tax regime that
This buzz came to surface once the contents of the famed Budget Speech became public knowledge, and not only that, news reached the mass that the contents of the Finance Bill were enforceable effective July 1st, 2013. Then we started feeling the pinch. Then we started talking. Then we started a process of collecting signatures for a common goal….(a petition) to abolish an item introduced by the Bill.
Are addressing the full scale of the new changes, or this is just the tip of an iceberg, while the ice mass remains unmoved under the water surface?
What is New?
Before we talk about the public outcry, we need to be aware of what are the changes in our tax regime that
would end up on your phone bill (directly or indirectly)
Some of the above, namely the simcard tax and excise duty would be born directly by the end user while the commission on mobile money transfer would theoretically be payable by the beneficiary of the commission (i.e. Mobile Money Agents and Mobile Phones Operators). To the latter, it is simply tax on their income, with the operator retaining 10% of commission payable to their agents and remitting it to TRA in advance. (how does withholding tax system will require a different post)
Simcard Tax – why all the noise?
Of the changes introduced, the Simcard Tax levy has been the most popular one and seem to garner a lot of controversy on the online communities as well as in the streets. What a the facts?
Is Simcard Tax Everything there is To Cry About?
As pointed out earlier, there has been a change in other taxes and introduction of new ones on previously un-taxed services. Lately, there has been a rise in internet subscription costs by 20-25% and we have also note a significant tariff changes in Mobile Money Services. Whereas some companies had a zero-cost withdraw policy (as in "withdraw what you received"), we have seen customers being charged to withdraw money sent to them, and the sender being charged as well for the same transfer (though the rates differ)
Further to that, the extension of the Excise Duty (at 14.5%) to all other services beyond the recharge voucher introduces another contradiction to the taxation process. The injustice of Double Taxation. It is imperative to note that all services are paid for either by recharge vouchers, from select Banks via ATMs or Sim/Online Banking Facility or by airtime bought from mobile money services. When purchasing the airtime, the customer is already taxed (both excise and a gross up of VAT at 18%). The practice of levying usage of services means that the same service whose taxes have been paid upon the purchase of airtime, will be taxed again during the consumption of the very same airtime, hence Double Taxation.
To make matters worse, when customers enquired from their service provider on the reason for the increase of charges, (both internet and money transfer), the companies responded that this has been due to the increase in taxes. This is same fear that analysts had when the budget was read, that this burden of tax (even where it should be born by the operators/agents) will be transferred to the customers.
These semi-visible and hidden charges are the ones that will defeat the purpose that these services were intended to serve. With the increase of people using mobile money as their means of payment and banking (storage) of currency, the increase in transaction costs will see some people revert back to the traditional banking, where some have even scraped the ATM charges and introduced SimBanking which is more affordable than the Mobile Money Services.
Increase in cost of date will see a reduction or rather, a slow growth of internet users at the time when the is a need to push the penetration of internet further into the population, directly impacting any effort to increase access to information, e-commerce and the endless list of benefits internet could bring.
Are we addressing the Core Issue?
The truth is our taxation laws are continuously leaning towards the common citizen, and there is more than a citizen could afford. Efforts I see by pressure groups and activists could be fruitfully invested in ensuring there is social justice and our there is a fair dealing when it comes to spending the taxpayers money. To be specific, in this case here, focusing heavily on Sim Card Tax is a good move, a step towards the right direction. But in my humble opinion, within the same monster, we are only addressing the toenails; there is a huge mound to climb in ensuring that the Changes in the Finance Bill 2013 are looked into again, with the light of revision, changes or abolishment.
Some of the above, namely the simcard tax and excise duty would be born directly by the end user while the commission on mobile money transfer would theoretically be payable by the beneficiary of the commission (i.e. Mobile Money Agents and Mobile Phones Operators). To the latter, it is simply tax on their income, with the operator retaining 10% of commission payable to their agents and remitting it to TRA in advance. (how does withholding tax system will require a different post)
Simcard Tax – why all the noise?
Of the changes introduced, the Simcard Tax levy has been the most popular one and seem to garner a lot of controversy on the online communities as well as in the streets. What a the facts?
Is Simcard Tax Everything there is To Cry About?
As pointed out earlier, there has been a change in other taxes and introduction of new ones on previously un-taxed services. Lately, there has been a rise in internet subscription costs by 20-25% and we have also note a significant tariff changes in Mobile Money Services. Whereas some companies had a zero-cost withdraw policy (as in "withdraw what you received"), we have seen customers being charged to withdraw money sent to them, and the sender being charged as well for the same transfer (though the rates differ)
Further to that, the extension of the Excise Duty (at 14.5%) to all other services beyond the recharge voucher introduces another contradiction to the taxation process. The injustice of Double Taxation. It is imperative to note that all services are paid for either by recharge vouchers, from select Banks via ATMs or Sim/Online Banking Facility or by airtime bought from mobile money services. When purchasing the airtime, the customer is already taxed (both excise and a gross up of VAT at 18%). The practice of levying usage of services means that the same service whose taxes have been paid upon the purchase of airtime, will be taxed again during the consumption of the very same airtime, hence Double Taxation.
To make matters worse, when customers enquired from their service provider on the reason for the increase of charges, (both internet and money transfer), the companies responded that this has been due to the increase in taxes. This is same fear that analysts had when the budget was read, that this burden of tax (even where it should be born by the operators/agents) will be transferred to the customers.
These semi-visible and hidden charges are the ones that will defeat the purpose that these services were intended to serve. With the increase of people using mobile money as their means of payment and banking (storage) of currency, the increase in transaction costs will see some people revert back to the traditional banking, where some have even scraped the ATM charges and introduced SimBanking which is more affordable than the Mobile Money Services.
Increase in cost of date will see a reduction or rather, a slow growth of internet users at the time when the is a need to push the penetration of internet further into the population, directly impacting any effort to increase access to information, e-commerce and the endless list of benefits internet could bring.
Are we addressing the Core Issue?
The truth is our taxation laws are continuously leaning towards the common citizen, and there is more than a citizen could afford. Efforts I see by pressure groups and activists could be fruitfully invested in ensuring there is social justice and our there is a fair dealing when it comes to spending the taxpayers money. To be specific, in this case here, focusing heavily on Sim Card Tax is a good move, a step towards the right direction. But in my humble opinion, within the same monster, we are only addressing the toenails; there is a huge mound to climb in ensuring that the Changes in the Finance Bill 2013 are looked into again, with the light of revision, changes or abolishment.
Source: http://www.wavuti.com/4/post/2013/07/opinion-why-sim-card-tax-is-not-an-issue.html#ixzz2ZJXDQwwS
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