It turns out that the Tanzanian government has suspended a new tax that was introduced in the beginning of this month. This tax had the country’s mobile users charged TSH 1000(USD 0.62) every month for every SIM card.

The contentious tax was meant to raise about USD 130 million annually to aid in rural infrastructure developments, instead the customers aggressively rejected the tax which forced the government to review their books and cut it off.

The minister of finance, Dr. William Mgimwa announced the change of strategy saying that the government will do a further consultation based on the complaints and may revisit the tax if it is to be resumed.

“We are not about to start charging the introduced tax because we are still working with the system as we don’t want to harm the community,” said Mgimwa.

The biggest criticisms about the new tax had come from the rural poor, who often spend less than what the tax would have charged in a month, effectively more than doubling their monthly phone costs.

The government does however face a problem with a very low tax base and high evasion, while a tax on mobile phone services would be much harder to avoid paying.