Communication service providers reject taxation on mobile money transfer.

By Alex Muriithi.

Communication service providers Telecom ,Airtel,and Safaricom operators have reacted to  Henry Rotich’s Cs Treasury, announcement last Thursday that he intends to increase excise tax on mobile money transfers from 10 per cent to 12 per cent to cater money for the Budget of the financial year 2018/19 and the funds will be used to fund universal healthcare programme that aims to cover all households by 2022.

The operators said that the move will hurt the poor most and undo most of the gains made in promoting a cash lite economy having in mind that 70% of Kenyans rely on mobile money hence allowing the value of transactions to trend on a steady growth path in the past 10 years.

Airtel operators via their spokesperson said that they will have to wait till the parliament settles on the decision then it will further consider other measures , “We will await Parliament’s decision on the proposed legislation and consider the issue further.”

Safaricom Chief Finance Officer, Sateesh Kamath giving the Safaricom’s stand said that,“We appreciate that the government needs taxes to meet its fiscal objectives but our view is that increased excise duty on mobile money transfers will negatively impact mobile money transfer services and payments and slow down the drive towards a cash lite economy,again this could also negatively impact the least able in our society, who are largely un-banked and who rely on mobile transfer services such as M-PESA. It would be unfortunate to reverse the gains we have made in recent past through mobile-led financial inclusion”

If the Parliament passes the motion, KRA is likely to attain tax increment close to billions of shillings as additional revenue from mobile money transactions, but at the expense of poor Kenyans.

Consumer Federation of Kenya (Cofek) was also not left behind in attributing its views citing that the move by the Treasury ministry will only intend to oppress the poor, the cofek in its statement it outlined that, “The rise in excise tax, especially on M-Pesa among many others, can only mean a bleak future for the consumer.”

According to Communication Authority of Kenya report,data for the second quarter of 2017/18  marked a 64% increase indicating that transactions grew to Sh1.17 trillion up from Sh714 billion in the previous quarter.

Telecom representatives added that they are in the process of reviewing the new charges and further measures will be taken into account following the findings and the parliamentary decision, “Taking into account that the Budget was read last week Thursday (into a long weekend), the concerned parties will be looking into this, this week. We are now in the process of reviewing the proposed changes and will be guided by the findings,”  Telecom representatives said.