Duty cut on VXs is what makes SMS tax immoral

Tom Sangala June 16, 2015

436 3 minutes read

The introduction of a 10 percent excise duty on phone text messages and Internet could probably have passed without much debate had it been that import duty on large engine vehicles such as VXs had not been reduced in the same government financial plan.

Finance Minister Goodall Gondwe is adamant on maintaining the new tax on the communications services despite widespread calls even from his fellow minister for information and the government-run Malawi Communications Regulatory Authority (Macra) to reverse the decision.

Goodall argues that Malawi “is the only country” that does not impose tax on text messages and internet amongst its neighbours namely Mozambique, Tanzania and Zambia.

He wonders why the taxes on SMSs and internet are painful in Malawi and not in the other countries.

However, what Goodall should know is that the irony of introducing tax on basic services which are also used by the poor while providing tax relief on luxurious vehicles only affordable to companies and the rich is what makes the taxes immoral.

Mobile phone and internet services are indeed a growing and lucrative sector that would naturally attract the attention of the government when it comes to taxes.

With Goodall currently under pressure to fill the gap left by donors who are no longer supporting the budget, such taxes would somehow be expected since it is the primary responsibility of citizens to fund government operations through various taxes levied by Uncle Sam.

But considering that there are certain groups of the population that can feel the pinch of taxes more than others, a responsible government would first of all target luxurious things with the taxes while sparing b a s i c goods and services also used by the poor.

Taxing essential needs such as basic food items, water, electricity, housing, building materials, education, health, transport and communications should come as the last resort. Beer, cars, cigarettes and up market foods items such as tinned foods can at times be acceptable.

Regardless of the state of the economy, introducing tax basic things while reducing the same on luxurious items is an immoral and irresponsible action by a government which is supposed to put the needs of its poor people above all else.

Goodall could have been forgiven if he had only introduced duty on SMS and internet services without reducing duty on vehicles with an engine capacity beyond 3,000ccs.

And the Minister of Finance has no grounds or justification defending this because it is simply wrong.

As I argued the other day, communication is this era a necessity and not a luxury.

Text messages are even more basic.

With a text message, communication is simple and straight forward and is based on a fixed and well known rate unlike a telephone call where one can end up talking more than the intended message, thereby incurring more and unplanned costs.

People use text messages to spread messages about funerals, sicknesses, weddings and other important family, personal and community messages.

While most urban and higher income cellphone users have migrated to more sophisticated means of communication such as WhatsApp, Facebook, Twitter and e-mail, rural and low income people, who can’t afford smart phones still use text messages as a basic form of communication.

The Minister of Finance may also wish to know that the internet is no longer a luxury service that is only available to the rich and companies. Many ordinary Malawians now own smart phones that can access the internet.

The youth and most urban dwellers are now able to easily access the internet and get information on education, health and businesses through smart phones and basic internet services being provided by mobile phone companies.

The new excise tax on text messages and internet services is a classic example of a misplaced tax measure.

As Macra has rightly stated, the tax would increase charges for the services, making them out of the reach for the majority of users.

And is Goodall not surprised that even his fellow cabinet minister has joined calls condemning this tax?

It does not hurt for one to admit that they have made a mistake. Goodall should accept that he got it wrong on this tax and should reverse his decision before the budget and related legislation are approved in the national assembly formalising this anomaly.

If he doesn’t, our Members of Parliament have an obligation to stand up for the people and force the government to act responsibility on this and other such matters.

Malawians have simply said no to taxes on basic things while providing relief to luxurious items. If Goodall is worried about where to get money should the tax on SMs and Internet be dropped, let him withdraw the duty cut on the VXs and use that to finance the gap in the budget. #Thumbs Down to the Minister of Finance.