Mozambique: Government switches new tax from users on to mobile companies

Telecoms

Under a hail of criticism, the Mozambican government has withdrawn its proposal for a new tax on users of mobile phones. On Tuesday, the Minister of Transport and Communications, Paulo Zucula, told reporters that it was not the clients of the mobile phone companies, but the operators themselves, the publicly-owned M-Cel and the local subsidiary of the South African company Vodacom, who were expected to contribute to the new Transport and Communications Development Fund.

He thus contradicted a clause in a government decree of 15 September which stated that every client of M-Cel and Vodacom who has a contract with the companies would pay 30 meticais (83 US cents) a month to the fund, while subscribers who use the pre-paid cards would pay five meticais a month. The sums raised by such a tax are far from negligible - they could amount to around 35 million meticais a month.

But now this clause in the decree has been amended. According to Zucula, the new wording is that Vodacom and M-Cel "may contribute" to the fund - which makes it sound as if it is not a tax at all, but a voluntary contribution.

Zucula said the version of the decree as published in the official gazette, the "Boletim da Republica" was a mistake - it had been sent to the printers before it had been corrected and approved by the Council of Ministers, he claimed. The version published suffered from "drafting problems".

Yet it took the government almost five weeks to correct these "drafting problems". And it only did so after strong criticism in the Mozambican media, and after the two operators had pointed out the huge difficulties involved in collecting such a tax (for instance, people using the pre-paid cards sometimes have nothing at all in their accounts - so how could the companies deduct five meticais a month from them?).

Zucula added that the decree does not impose anything on the mobile phone operators, but seeks their "collaboration". This does have one merit - it means the decree is no longer unconstitutional. Ordering all mobile phone subscribers to pay a fixed sum every month would be a new tax, and under the Mozambican constitution only the country's parliament, the Assembly of the Republic, and not the government, can create new taxes.

Since the government s now talking only of a voluntary contribution, constitutional issues are not raised. But it is also most unlikely that either Vodacom or M-Cel will agree to pay this "contribution" - both companies are facing unexpected costs from the government order that the sim cards of all mobile phone subscribers must be registered by 15 November. These unbudgeted costs will hit their finances seriously, and they are unlikely to be in any condition to pay further millions of meticais a month to a government fund.

Sadly, another case of an African Government over-taxing the duck that lays the golden eggs.