Tanzania’s Controversial Mobile Phone Tax Could Grow Revenues, At The Expense Of The Poor

Monday, July 22, 2013

A controversial new tax policy in the East African country of Tanzania could have an outsized effect on its low-income citizens — the very people the tax revenues are intended to benefit.

According to a finance bill amendment passed in June, the government is imposing a monthly tax of 1,000 Tanzanian shillings ($0.62) on all SIM card users in the country. It’s also clamping down on unregistered users to limit tax avoidance.

The new levy is a touchy subject because mobile phone services are booming in Tanzania, as they are across all of Africa.

Research from the World Bank and the African Development Bank indicates that 650 million people on the continent are using mobile phones, and not just for social calls. One of the most popular services associated with SIM cards is mobile banking, which allows users to store and send money via their phones instead of using a traditional bank account.

These services have become a lifeline for the poor in Tanzania, and critics of the new tax argue that it will hurt these vulnerable users.

Source: International Business Times (link opens in a new window)