New govt health levy to hit mobile subscribers

Source: New govt health levy to hit mobile subscribers – DailyNews Live

STAFF WRITER  o   11 April 2017

HARARE – The decision by President Robert Mugabe’s stone-broke government
to implement a five percent health levy on airtime and mobile data will
hit hard long-suffering ordinary Zimbabweans who are reeling from multiple
effects of a dying economy, experts say.

This comes as two weeks ago, government enacted the new tax into law
through the Finance Act of 2017, leaving mobile network operators with no
choice but to comply and collect the tax on its behalf.

The tax which has been backdated to January 1, 2017, will likely create a
collection challenge for mobile network operators for their predominantly
prepaid customers, unless they seek a special waiver from the authorities
on collection of the January to March levies.

“This (collecting the tax on behalf of government) will amount to a tariff
increase, even though the mobile phone companies will not benefit from
it,” an expert told the Daily News.

“Failure by the mobile operators to comply will attract punitive penalties
from the Zimbabwe Revenue Authority (Zimra) of up to 300 percent of the
taxable amount.”

The Health Fund Levy of five cents for every dollar (or 5 percent) was
first referred to by the Finance minister Patrick Chinamasa during his
budget presentation in December last year.

It comes at a time government expenditure has consistently led to budget
overruns in the past, resulting in a deficit of $1 billion at the close of
2016, with over 90 percent of it going to wages rather than capital

Recently, the cast-strapped government introduced a raft of taxes on small
businesses, including charging between $45 and $70 per month for urban
public commuter transport operators (or kombis) depending on seating
capacity, and a $10 per chair tax for hair salons.

In a huge volte face, government was last week made to reverse a 10
percent tax it had imposed on tobacco farmers following threats of
withholding the crop from the current marketing season by the irate

“It is not clear how the mobile operators are going to comply with the
implementation of the latest tax, and whether they will all comply,” said
technology expert Claire Rungano.

“However, what is clear is that the new tax is likely to create a new
outcry from mobile subscriber customers in a market where the perception
is that mobile tariffs are still high,” she added.

In January this year, Econet Wireless – the biggest operator by subscriber
base and revenue contribution to the fiscus – went on ahead to implement a
data floor price, but Telecel and NetOne, which are both owned by the
government, elected not to carry out the directive.

The new data floor price was subsequently reversed after touching off an
acrimonious exchange between Econet and ICT minister Supa Mandiwanzira
with either party accusing the other of acting in bad faith.