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Zimbabwe: New $50 levy on smartphones is a crackdown on telecoms

By Farai Shawn Matiashe
Posted on Tuesday, 14 December 2021 10:18

Zimbabwean Finance Minister Mthuli Ncube looks on before the swearing in of new cabinet ministers at State House in Harare
Zimbabwean Finance Minister Mthuli Ncube looks on before the swearing in of new cabinet ministers at State House in Harare, Zimbabwe, September 10, 2018. REUTERS/Philimon Bulawayo

In 2022, Zimbabwe’s telecom operators will have to collect tax on new smartphones as the cash-strapped government desperately looks for revenue.

Finance Minister Mthuli Ncube proposed the new $50 levy on 25 November 2021 in Parliament as part of his national budget for next year.

“Whereas imported cellular telephone handsets attract modest customs duty of 25%, the funds realised, however, point to evasion of the customs duty due to the nature of the items, which can easily be concealed,” Ncube told Parliament. “In order to curb tax evasion, I propose to introduce a levy of $50, which will be collected prior to registration of new cellular handsets by Mobile Network Providers.”

However, in the event that the duty has been paid, the Zimbabwe Revenue Authority will provide a refund of the levy, within 30 days of receipt of payment from the mobile network operators, but Zimbabweans are skeptical as to whether the taxman will live up to his own words considering the level of corruption in the country.

Parliament’s approval is the last ‘line of defense’

The budget with this new $50 levy is now awaiting approval from Parliament.

Parliamentarians have accused Ncube of bringing the levy into the national budget through the backdoor, after they disagreed with his idea during the pre-budget seminar in Victoria Falls in late October.

The Parliamentarians have vowed not to approve the budget if this new $50 levy on smartphones is not scrapped.

Internet access should therefore not be a luxury as it is a basic need, especially in this digital age. Mobile devices should be easily accessible.

“We had a pre-budget and there was nothing about that. We are actually trying to digitalise as a country, more online lessons and all, so why try to fight the very momentum of digitalisation we are aiming at?” Temba Mliswa, an MP of Norton Constituency, said on Twitter.

There is a whipping system, however, where a political party chief whip can call members from his or her party not to disagree with the finance minister. Considering the ruling party, Zanu PF, has the majority of MPs, the $50 levy is likely to slip through Parliament.

‘Zimbabwe’s telecom sector is highly taxed’

Besides an already-existing 25% tax levy on imported smartphones and another levy on voice as well as data top-ups, the taxman collects his infamous 2% tax on all electronic financial translations.

An Econet spokesman tells The Africa Report that the industry’s tax burden is quite high, but they are hoping that continuous engagements with the authorities will result in a review by the policymakers.

“Our views about the telecoms industry’s tax burden and its impact on consumers are known,” he says. “We will continue to engage the relevant authorities to find solutions that address the concerns of all stakeholders while maintaining the industry’s viability and its capacity to offer quality service.”

Crackdown ICTs and access to information

The majority of Zimbabweans access the internet via mobile smartphones as opposed to computers.

In Sub-Saharan Africa, the average price of a smartphone is 45% of average monthly income of ordinary citizens, according to the Alliance for Affordable Internet’s 2021 device pricing review report.

Device Pricing 2021

“The importance of internet access and use in this digital age cannot be overemphasised as has been experienced in the wake of the Covid-19 pandemic,” says the Media Institute of Southern Africa (Misa Zimbabwe) in a statement early this month.

“Barriers to internet access exist at a time when the telecommunications industry is heavily taxed while the cost of devices, particularly smartphones, laptops and computers, including mobile data tariffs, is still exorbitant.”

In Zimbabwe, prices of data have been going up as telecom operators chase away the country’s spiralling inflation.

The data prices, which have been reviewed on a monthly basis, have gone beyond the reach of many, with the State-owned NetOne’s 10 gigabytes costing 4,500 Zimbabwe dollars ($26).

Nompilo Simanje, legal and ICT policy officer at Misa Zimbabwe, tells The Africa Report that the $50 levy – if approved and implemented – will widen the digital divide in Zimbabwe.

“Already, affordability has been the key hindrance for access and use of ICTs by ordinary Zimbabweans as more fully seen through the frequent increases in costs of data tariffs,” she says. “Internet access should therefore not be a luxury as it is a basic need, especially in this digital age. Mobile devices should be easily accessible.”

In June 2021, some countries like Rwanda proposed to waive value-added tax on smartphones, tablets and modems to encourage the use of telecommunications services to achieve the target of 80% of internet users by 2025. However, Zimbabwe has decided to join countries that include Uganda, which is taxing ICTs gadgets and social media.

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