Cost of living: Study shows 68 percent ‘unhappy’, government reacts
What you need to know:
- Research findings released yesterday by Twaweza also showed that 68 percent of respondents were happy with improved delivery of social services, but the National Bureau of Statistics termed the data “unofficial’
Dar es Salaam. The government has warned that the recently released data of a survey on the state of the national economy and levies on electronic transactions remain unofficial.
“The findings are theirs (Twaweza) and we’ll look into them before we give the official government position. As the findings stand, they are not official,” statistician general Albina Chuwa said as she responded to questions posed by Mwananchi newspaper yesterday.
Dr Chuwa was reacting to findings of a survey by Twaweza that showed that the state of the economy was a mixed bag of fortunes and that Tanzanians had varying opinions on the electronic transaction levies introduced in the 2021/22 financial year.
Twaweza’s survey, which involved 3,000 people, shows that 68 percent of the population was unhappy with the rise in the cost of living during the past six months.
As per statements released by the government at different times, the state only reflected global trends mainly due to rising prices of petroleum products, fertiliser, shortage of wheat and cooking oil in the world market all some who linked to the Russian invasion of Ukraine and disruptions caused by the Covid-19 pandemic.
On a positive note however, 68 percent of those interviewed said they were satisfied with the improvement in delivery of social services while another 60 percent said they were happy with the government improvements in freedom of expression during the past six months.
About 6 people in 10 were also satisfied as they can freely enjoy their political rights, while trends showed general improvement in issues of defence and security as well as reduction in cases of violence against women and children.
But on the other hand, the survey reveals that levies and fees on electronic transactions could adversely affect the government’s revenue generation targets as Tanzanians shift to other means of sending and receiving money. The report was based on the 2021 law on charges for electronic transactions which introduced levies on money transactions through mobile phones from July 2021.
However, the costs were reduced by 30 percent in September 2021 and were reduced again in July 2022, making a total reduction of 60 percent of the previously set rate.
But, new regulations that came into effect in July 2022 after Parliament amended the National Payment System Act, have since left tongues wagging with experts noting that the move adds to the rising cost of living as well as threatens the circulation of money in the formal sector.
The survey conducted between October 2021 and July 2022 involving 3,000 respondents from the sixth phase (October and November 2021) and the seventh (June and July 2022) that was launched yesterday, showing that 80 percent of the respondents were aware of mobile phone transaction charges, while 34 percent did not support the introduction of such charges.
“Forty four percent reported that they have reduced sending money over the phone, while the amount of money they receive over the phone decreased since July 2021. For the residents of Dar es Salaam, the amount has decreased by more than 70 percent...,” reads part of the survey.
Mr Aidan Eyakuze, the executive director of Twaweza, said, “Fees have increased the cost of important services, they have caused citizens to significantly reduce the use of these services and may at long last affect revenue collection.”
In order to balance the situation and build a just society, Mr Eyakuze said the government should listen to the voices of the people when making major decisions such as taxation.
“The attention of the government will help build the confidence of the people, and increase their motivation to contribute to the development of the country,” he said.
An economist from University of Dar es Salaam (UDSM), Dr Wilhelm Ngasamiaku, said the charges should be reviewed in order to remove the uncertainty on double taxation, failure of which people would revert to traditional means of sending and receiving money.
“It’s not that people don’t want to be charged, its importance is known for the economy, but it increases pain because even if you transfer money from a bank to a mobile phone, you are still charged several times,” he stressed. Dr Ngasamiaku noted that in recent years, a big effort was in encouraging rural citizens whose bank services have not reached to use mobile phones with the aim of promoting financial inclusion, through these charges, he believes the goal may not be reached.
Another economist from UDSM, Dr Jehovaness Aikaeli, said there were few sources of income and that was what was troubling most developing countries, as a result the government collected taxes from sources that were visible such as bank transactions.
“The government must look into ways of formalising businesses that are operating informally. There are many taxes that are lost, and this will help reduce charges on bank and mobile transactions,” he noted.
Dr Aikaeli added that if such tax was legal and that citizens were not satisfied, the latter should continue to raise alarm so that the parliamentarians who passed the law can see how to amend and change some features.
A financial analyst who asked not to be named for professional reasons commented that from last year there was introduction of charges on mobile transactions that caused much uproar and in two phases, they have been reduced by over 70 percent by the government in collaboration with the mobile network operators association.
This, he said, was phase one which was after joint discussions with telcos and phase two recently via the new finance bill.
“What we are having now is the discontent on the base for the fees being widened to also include electronic transactions on the banking side. This widening of the scope of the charge to banking seems to have supported the reduction of the initial mobile “charge “ which was hitting more of the average Tanzanian with over 20 million wallets,” he noted.
He said electronic payment related fees whilst very tempting for policy makers as the base was widespread and administration is simple have yielded controversial results across Sub-Saharan Africa.
