After a proposal by the Kenyan Finance Minister to tax mobile money transfer in the country, Tanzanian economists have fired a warning at their own government, saying that the implementation of similar steps in Tanzania would lead to less mobile money transfers and a loss of customers.
“People are moving away from companies that charge for receiving money to those that are not charging, even if it is Tsh.1,000. The government should make sure that such taxes be introduced on telecommunication companies’ expenses.” said economist Dr Prosper Ngowi, a Senior Lecture at Mzumbe University Business College.
He acknowledges that Tanzania is in need of funding from different sources but said that taxing mobile money transfer in the country would not be the way.
The consequence of this taxation is that costs would be transferred back to the users – which would reduce the rate of communication.
According to East African Business Week, “he noted that besides the size of the market, tax was also one of the many factors that both foreign and local investors look out for as far as investment was concerned and that conducive taxes was an avenue to attract investment.”