Last year in December, Zimbabwe’s Minister of Finance, Patrick Chinamasa proposed a 5% tax on all mobile phone airtime and broadband as part of his budget proposals. The tax, called a Health Levy and themed “Talk, Surf and Save a Life” is expected to be part of the budget allocation for the Ministry of Health and be used for procuring drugs and equipment with effect from January 2019.
Government has finally implemented this 5% Health Levy proposition with an amendment to the law (Finance Act (No. 2) 2017, Section 31(49). The government is backdating the application of this tax to January 2017.
Predictably internet providers are passing this cost on to consumers and have already started communicating the tariff change.
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A customer of Liquid Telecom sent Techzim the letter they received from the fibre company. Essentially, they are advising customers that the tariff will now be increased. Here is the letter:
RE: 5% SPECIAL EXCISE DUTY ON ALL TELECOMMUNICATION SERVICES
On the 24th of March 2017, the Minister of Finance amended the Finance Act (No. 2) 2017, Section 31(49) to levy an additional 5% (Five percent) special excise duty, which has been designated as a Health Fund Levy on our services. This is to be levied and collected by us from you and credited to the Health Fund Levy established under section 18 of the Public Finance Management Act [Chapter 22:19] (11/2009).
We therefore advise that consistent with this new legislative requirement, we will be applying a 10% excise duty for all our data and airtime services with effect from 1 April 2017; this will reflect on your monthly invoices from 1 April 2017 going forward.
Kindly note that the gazetted effective date of this new requirement has been set to apply retrospectively to 1 January 2017. We have engaged the authorities to request a waiver of the first 3 (three) months and proposed an effective start date of 1 April 2017 in a bid to cushion our clients. We will keep you informed on the development of these engagements.
We thank you for your usual cooperation.
We expect other telecoms companies will also announce similar changes in the coming weeks. Update: And they have.
Whether it’ll actually be used for that or not is ofcourse another matter altogether. Not to sound too negative on our government, but it likely won’t. Just recently for example, the Minister of ICT proudly disclosed that he had used Universal Services Fund to buy a new company for the government (the company is a competitor of the fund’s contributors).
It’s really just a matter of the government identifying sectors that are profitable and targeting them with new taxes.