NEWLY-introduced banking transaction levy is meant to finance essential social services projects that cannot be financed by the national budget, the government said on Thursday.
The Minister for Finance and Planning Dr Mwigulu Nchemba issued the clarification yesterday, saying the new levy is part of the government’s strategy to widen the scope of transaction levies by covering all electronic transactions.
The banking transaction levy came into effect last month after it was formally published in the Government Gazette NO.478V on July 1, 2022.
It has come as an extension to mobile money transaction charges introduced by the government in the last financial year 2021/22 for the sake of raising funds for improving the health and education sectors.
“This levy has been introduced for the sake of raising funds to be used in implementing projects that couldn’t be covered by the main budget due to the deficit,” he said, adding that the government had lowered the charges from the maximum of 10,000/- to 4000/-.
Equally, the government is working on workers’ concerns regarding double deduction, pledging to come up with a new arrangement that will address the challenge within a short time, said Dr Nchemba.
With the new levy, the government will also be in a position to undertake the ongoing strategic projects and at the same time implement the essential projects for improved social service delivery.
Giving a breakdown of where the government channels the money collected from the mobile transaction levies from the previous financial year, Dr Nchemba said part of the money was used to finance higher education and construction of health facilities in the country.
“In the year where the mobile money levies were introduced, the budget for Higher Education Students’ Loans Board (HESLB) increased by 221bn/-, while 117bn/- was spent in constructing health centres in the periphery areas,” he said.
To complement the efforts that were deliberated in the previous financial year by constructing 15,000 classrooms and 234 health centres across the country, the government assured to continue improving infrastructure for the essential two social services.
Dr Nchemba explained that the government has planned to spend part of the money to be collected in constructing 8,000 classrooms between this month and January next year to enable the schools to accommodate a huge number of students who will be joining Form One.
According to the Finance Minister, the money will also be used in constructing houses for teachers and other necessary infrastructure, a move aimed at creating better learning environments.
“Moreover, the government will spend the collections in constructing houses for health personnel nearby health facilities to enable the medical staff to stay at their workplace,” noted the minister, adding; “These are essential social services projects that have to be executed through collaborative efforts by members of the public, for the sake of not affecting the implementation of the ongoing strategic projects and productive sectors.”
Dr Nchemba went on to explain that the government is working on workers’ concerns on double deduction resulting from the new levy.
The concern was on the ground that, an employee whose salary is channeled through a bank account will be charged when withdrawing and doing mobile money transfers.
“The government has seen these concerns and we shall come up with an arrangement that focuses on addressing this challenge,” assured the minister, insisting that the government will continue to make a conducive environment for expanding the scope of tax payers.
For his part, the Minister of State, President’s Office Regional Administration and Local Government (POLARG) Mr Innocent Bashungwa said his docket will properly supervise spending of the money on ensuring the projects are executed accordingly.
These levies are crucial for development and improvement in social service delivery, as it is aimed at increasing the number of schools, classrooms and health facilities.
In the health sector, Mr Bashungwa said by December 2020, the country had a total of 21 regional hospitals, 102 district hospitals, 487 health centres and 1,198 dispensaries.
“But in one year of the administration of the sixth phase government, we have managed to construct 234 health centres at a cost of 117bn/- collected from mobile money transaction levies,” he said.
The Minister of State Prime Minister’s Office Police, Parliament and Coordination George Simbachawene and his Labour, Employment, Youth and the Disabled counterpart Joyce Ndalichako, who also attended the meeting, assured the government’s commitment to working on challenges of workers.
