New govt health levy to hit mobile subscribers

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 projects.

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 farmers.

“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. Daily News