The government on Thursday revealed that it was in final stages to establish what it called, “telecommunication traffic monitoring system”—aimed at curbing the massive tax evasion within the multibillion shillings sector.
According to the Minister for Communication, Science and Technology, Professor Makame Mbarawa, four out of 23 international bidders have been selected, ready to implement the project.
This is good news because for some years, the mobile phone industry has been giving little money to the government’s coffers, even though it is the biggest source of revenue.
With revenues amounting to $1.7bn a year, mobile phone companies paid only 0.1 per cent in taxes in 2010, according to the Tanzania Communications Regulatory Authority (TCRA), some 23.804 million mobile phone subscribers did not pay up at the end of 2011.
So translates to more than 23 million subscribers in the country, which means 60 per cent of the total population doesn’t pay.
To put things in perspective, when Tanzanian customers click, mobile phone companies make about $1.17 billion (Sh1.85 trillion) a year, more earnings than the mining sector - basing on the average benchmark revenue of Sh6,705 per user, as documented by TCRA in December, 2011 –which means that Tanzanians contribute an average of $97 million (Sh154 billion) per month when they compete to text, call and surf the Net.
Despite raking in a staggering average of Sh1.85 trillion a year, mobile phone companies pay correspondingly far less taxes -- casting grave doubts about whether the country is technologically well equipped to collect due revenue from the sector.
Since the government lacks the advanced scientific means to traffic monitoring system, the taxman has been forced to rely on the data from the mobile phone industry—creating loopholes for massive tax evasion.
That’s why it doesn’t make sense for an industry that earns $1.7 billion yearly to pay just 0.1 percent to the Tanzania Revenue Authority.
While we fully recognise the impacts of the mobile phone sector to our lives especially in enhancing communication, we can’t accept a situation where the very same industry takes the advantage of lack of telecommunication traffic control system to dodge paying taxes.
We understand that there are some mobile phone companies which have been paying taxes as required, but there are also those big players who pay nothing or pay just peanut.
Tanzanians can’t afford to accommodate businesses, which aren’t paying taxes. Likewise, these businesses also can’t afford to operate in a country where consumers are not buying their goods and services.
That’s why we fully support the government’s move to introduce a modern technology to monitor all telecommunication traffic within the industry.
Similar move has helped countries like Ghana to triple revenues collections from the mobile phone industry some few years ago.