Why is computing mobile cash transfer levies this challenging?

That essentially entails finding a formula, via computer programming, that may broaden the framework on which the levy is calculated – and advise the government on the result.

It implies that how to go about it is now an aspect of fiscal and monetary policy regulatory instruments as different from tax administration as such. It is a tough issue.

While there are expectations that mobile money transfer levies may be slashed further with what Finance minister Mwigulu Nchemba says is a faster pace in the growth of the digital economy, that proviso all but rules out speed in that regard.

The good minister was likely to be comfortable enough with the 30 per cent reduction of government levy and the ten per cent diminishing of service provision charges announced on Tuesday.

This is clear from the spirited defence of the charges, and the wish that money continues being sent to districts.

In that case, the team of experts now working to see how technology can help boost economic efficiency in the digital sphere is welcome, as it might point out other ways of optimising revenue from digital operations as a whole.

Cash transfers is a salivating candidate to levy upon as it is more frequent than virtually any other method and, indeed, the minister didn’t say what exactly central bank experts will be figuring out to add to digital monetisation. It is to cast the nets into deeper digital waters.

The minister pointed out that around 63bn/- was collected in the six weeks following the start of application of the new levies, which has helped to complete the building of 220 new health centers in around 140 districts, in areas which have for decades lacked proper health facilities.

In addition, around 560 classrooms are being built using the new source of revenue – and the Treasury’s focus is now on marshalling funds to improve school facilities ahead of the new Form One intake early next year.

Noticeably, the minister affirmed that mobile cash transfers per day were not diminishing, going by data to the effect that an average of 10 million transactions were being observed before the levies and it was the same level during the past month.

What the central bank is thus working on is less the levies than a wider application of the method, and some news agencies stated that this may refer to taxing ‘Big Tech’ as it is called in the West, namely operations of companies like Microsoft, Apple, Google, Facebook, Amazon, etc. If this is indeed the wish, it could alter the burden of digital levies to a different pack of users.

Still that proposition could be a minefield like the cash transfer issue, the only difference being that the cash transfer levies constitute a local issue, not touching on globalisation.

Angling such effort to reducing the levy is a sweetener of sorts, while leaving it to the central bank to figure it out shows caution. That is how it should be so as to avoid starting a tug of war with all sorts of users in social and business communications.