Winners and losers as government finally acts on levies outcry

Winners and losers as government finally acts on levies outcry

Summary

  • The government yesterday scrapped the bank services levy and reduced mobile money transaction levies following strong criticism, but not all groups of people will benefit from the decision

Dar es Salaam. The government yesterday scrapped the bank services levy and reduced mobile money transaction levies following strong criticism from various quarters.

Mobile money services levies, which were introduced in 2021, and the new bank levies that took effect last month under the Electronic Transactions Fee regulation met with sharp criticism, with stakeholders saying they were adding more burden on consumers.

Going by yesterday’s new move, the bank services levy will cease with effect from October 1 and new mobile money transaction levies will become effective on the same date with a view to easing the cost of living for Tanzanians.

However, not all groups of people will benefit from the government’s decision.

Speaking in Parliament, Finance and Planning minister Mwigulu Nchemba said the government removed levies on withdrawals of up to Sh30,000 made through bank agents and automated teller machines (ATMs).

Putting it into perspective, those making transactions above Sh30,000 will be subject to the levies.

The government also announced a 10 percent to 50 percent cut on mobile money transaction costs.

Currently, the maximum levy stands at Sh4,000.

With yesterday’s new move, the current maximum levy of Sh4,000 will be reduced by up to Sh2,000.

This suggests that with effect from October 1, the maximum levy will go down as much as up to Sh2,000.

It should be remembered that this is the third time now the government has taken down mobile money transaction levies.

The first time was on September 7, 2021 when the maximum levy went down by 30 percent to Sh7,000 before the same was in June this year cut to Sh4,000.

Also Read: Government appoints team of experts to look into levies controversy

Also Read: CCM wants government to take action on levies

In what could be described as a sigh of relief to merchants, Dr Nchemba said the group of businesspeople will no longer be the victim of levies.

This was meant to do away with double taxation that met strong criticism since the introduction of levies.

“We have decided to review the levies to reduce the burden on society, to foster cash transactions and avoid double taxation,” Dr Nchemba told the House yesterday.

He said the government was aware that the cut in levies will adversely affect its revenue.

Also ReadBeneficiaries of Heslb loans voice concerns over levies

In that regard, he said as a compensation, the government will have to undergo cost-cut measures so that the implementation of the development projects could not be adversely affected.

Cost-cut measures will involve the cut of training, seminars, workshops, domestic and foreign trip convoys for ministries’ officials.

The Halotel deputy managing director for Halopesa, Mr Magesa Wandwi, welcomed the government’s decision, saying it would boost financial transactions.

“Any change in transaction levies will make a difference,” recounted Mr Wandwi.

When the government introduced the levies, he expounded, telcos’ mobile money transactions were significantly affected.

“We are now recovering, but not fully, from the effect,” asserted Mr Wandwi.

He was of the view that the government and telcos should join their hands to raise awareness to the public about the changes made so that their decision to make transactions could not be distorted.

An economist from Mzumbe University, Daud Ndaki, was optimistic that the government’s decision will boost money circulation—a key ingredient for economic growth.

“What the government has done is commendable. The goal of any government on the globe is to bring a relief to its citizens and not otherwise,” Dr Ndaki told The Citizen by telephone.

The economist from the University of Dodoma, Dr Lutengano Mwinuka, commended the government for doing away with double taxation which was unhealthy for the country’s economy.

“With this new development, I am optimistic that economic activities will be stimulated,” he exuded his optimism.

Dr Mwinuka told this paper that with the government’s decision to scrap levies on transactions of up to Sh30,000, majority of people will enjoy the move.

“This is a group where the majority of Tanzanians using mobile money services fall. I am happy for the government’s decision,” he pointed out.

He applauded the government for removing levies touching financial institutions, saying it will have a spiral effects to service users.

However, the economist from the University of Dar es Salaam, Dr Abel Kinyondo, seemed to have been reading from a different script.

He said the government’s move was more of helping financial institutions and a minor group of people who had little impact on financial transactions.

“I don’t think the new government’s move will bring significant changes,” said Dr Kinyondo.

“Ultimately, it is not Mwigulu (the Finance minister) nor the government who is to blame for levies.”

“It is citizens who are to blame for their failure to raise voices back then to prevent the establishment of levies.”

Share this news

Facebook
Twitter
LinkedIn
WhatsApp

This Years Most Read News Stories

Britam half-year net profit hits Sh2bn on higher investment income
Tanzania Foreign Investment News
Chief Editor

Britam half-year net profit hits Sh2bn on higher investment income

Insurer and financial services provider Britam posted a 22.5 percent jump in net earnings for the half-year ended June 2024, to Sh2 billion, buoyed by increased investment income.

The rise in half-year net profit from Sh1.64 billion posted in a similar period last year came on the back of net investment income rising 2.5 times to Sh13.27 billion from Sh5.3 billion.

“We are confident in the growth and performance trend that Britam has achieved, supported by its subsidiaries in Kenya and the region. Our business is expanding its revenue base while effectively managing costs,” Britam Chief Executive Officer Tom Gitogo said.

“Our customer-centric approach is fueling growth in our customer base and product uptake, particularly through micro-insurance, partnerships, and digital channels.”

The investment income growth was fueled by interest and dividend income rising 34 percent to Sh9.1 billion, which the insurer attributed to growth in revenue and the gains from the realignment of the group’s investment portfolio.

Britam also booked a Sh3.79 billion gain on financial assets at a fair value, compared with a Sh1.8 billion loss posted in a similar period last year.

The increased investment income helped offset the 12.7 percent decline in net insurance service result to Sh2.13 billion in the wake of claims paid out rising at a faster pace than that of premiums received.

Britam said insurance revenue, which is money from written premiums, increased to Sh17.8 billion from Sh16.6 billion, primarily driven by growth in the Kenya insurance business and regional general insurance businesses, which contributed 30 percent of the revenue.

The group has a presence in seven countries in Africa namely Kenya, Uganda, Tanzania, Rwanda, South Sudan, Mozambique, and Malawi.

Britam’s insurance service expense hit Sh13.6 billion from Sh11.3 billion, while net insurance finance expenses rose 2.6 times to Sh12.3 billion during the same period.

“Net insurance finance expenses increased mainly due to growth in interest cost for the deposit administration business driven by better investment performance. This has also been impacted by a decline in the yield curve, which has led to an increase in the insurance contract liabilities. The increase has been offset by a matching increase in fair value gain on assets,” said Britam.

Britam’s growth in profit is in line with that of other Nairobi Securities Exchange-listed insurers, which have seen a rise in profits.

Jubilee Holdings net profit in the six months increased by 22.7 percent to Sh2.5 billion on increased income from insurance, helping the insurer maintain Sh2 per share interim dividend.

CIC Insurance Group posted a 0.64 percent rise in net profit to Sh709.99 million in the same period as net earnings of Liberty Kenya nearly tripled to Sh632 million from Sh213 million, while Sanlam Kenya emerged from a loss to post a Sh282.2 million net profit.

Continue Reading

Africa: Rwanda Gets a Grip Of Marburg, But Mpox ‘Not Yet Under Control’
Top News
Chief Editor

Africa: Rwanda Gets a Grip Of Marburg, But Mpox ‘Not Yet Under Control’

Africa: Rwanda Gets a Grip Of Marburg, But Mpox ‘Not Yet Under Control’

Monrovia — The Rwanda Minister of State responsible for Health, Dr. Yvan Butera, cautioned that while the country is beginning to see positive signals in its fight against the Marburg virus, the outbreak is “not yet over”. He, however, expressed hope that  “we are headed in that direction”. The minister said the epidemiology trend, since the disease was first discovered in the country more than a month ago, is moving towards fewer cases.

Dr. Butera, who was giving updates during an online briefing yesterday, said in the past two weeks, only two deaths were recorded while 14 people recovered from the disease. He said Rwanda was expanding its testing capacity with 16,000 people already inoculated against the disease.

The priority right now, Butera said, is “rapid testing and detection”.

Marburg is a highly virulent disease transmitted through human-to-human contact or contact with an infected animal. The fatality rate of cases, which has varied over the period, is more than 50%, according to the World Health Organization.  WHO said the highest number of new confirmed cases in Rwanda were reported in the first two weeks of the outbreak. There’s been a “sharp decline” in the last few weeks, with the country now tackling over 60 cases.

At Thursday’s briefing, a senior official of the Africa Centers for Disease Control, Dr. Ngashi Ngongo, said mpox – the other infectious disease outbreak that countries in the region are fighting – was been reported in 19 countries, with Mauritius being the latest country to confirm a case. He said although no new cases have been recorded in recent weeks in several countries where outbreaks occurred previously –  including Cameroon, South Africa, Guinea, and Gabon – Uganda confirmed its first Mpox death. This, he said, is one of two fatalities reported outside Central Africa.

Dr. Ngashi revealed that there was an increase in cases in Liberia and Uganda. He said mpox cases were still on an upward trend.

“The situation is not yet under control.”

Source: allafrica.com

Continue Reading