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What the airtime levy taught us about ministerial discretionary powers on tax

The last parliamentary budget sitting that came to a close in June 2021 passed a number of consequential changes to tax laws. Among them was the amendment of the Electronic and Postal Communications Act, (CAP. 306) and the National Payments Systems Act, (CAP. 437) by introducing an airtime levy rates ranging from TZS 5 to TZS 222.70 and a money transfer levy ranging from TZS 10 to TZS 10,000 respectively. The manner in which the levies would be collected, and the specific rates to be paid were left to the discretion of the ministers responsible who were required to publish regulations to effect the levies.

These levies were subsequently published by the Minister of Finance and Planning and the Minister of Information and Communication Technology. However, after massive public uproar, on 31st August 2021, the Finance Minister informed the public the levies would be reduced by 30%, with the mobile telecommunications operators also revising their fees downwards by 10%. Whilst these developments are positive, it is worth thinking about the merits and potential dangers of discretionary powers granted to office bearers when it comes to taxation.

A critical pillar for a functioning tax system is clarity and certainty. Clarity, as there should be little ambiguity about who the taxpayer is, and how much they should be paying. But certainty, because taxpayers need to be sure that the rates and manner of collection will not be changed too frequently. The introduction of the levies, read without the regulations, lacked those two key elements. It is the regulations that are sought to provide the needed clarity and certainty.

The newly amended provisions give the Minister the discretion to make regulations that will give more guidance as to how these new laws will be applicable. The core concept of discretion is choice. For discretion to exist, an official must be given power within a broad framework, to either choose the objective which is to be pursued, or if the objective has already been determined, to choose the most appropriate means or standard to achieve it.

Why then is this discretion so important? It may seem that discretion rather than strictly defined rules, is seen as a better mechanism for exercising power. The Government is called upon to intervene in many areas of social life and it is expected to solve problems in diverse areas such as employment, education, health care and environment; to mention a few. Therefore, to better serve the people, the Government should take a flexible approach in handling these issues, particularly, in finding new sources of revenue collection.

However, the issues that have to be grappled with in relation to taxation, are inherently complex and these complexities require a flexible approach. This means that ministers may at times have to exercise their discretionary power. A government where its ministers have only ministerial duties with no discretionary functions would be extremely rigid and would lack the nimbleness required for a responsive government. To some extent, ministers are allowed some discretion on how laws that affect their ministries should be administered. That is the basis for such discretion.

On the other hand, there is always a danger that the discretionary powers will be used in an unfair and / or arbitrary manner. The complex problems we face can be adequately dealt with in a legal framework which not only allows flexibility, but also allows the use of expert knowledge. Conferring full discretion on the minister to make regulations raises a few concerns. For instance, on what basis can a minister, without substantive expertise in the relevant issues, review, supervise and make well-informed decisions such as the rates of taxation? Ministers are politicians. They are likely to view issues mainly from the perspective of the Government. If governance is to be effective, the law should strive to eliminate such bias. This allows the citizen to know what is expected of them in advance and to plan accordingly. Absolute discretion falls short of this ideal because it allows the minister’s personal judgement on issues of public interest. Indeed, the airtime levy debate has revealed both the merits of such discretionary powers as well as the potential challenges with it.

Given the massive interest in, and the wide-ranging impact of levies such as the airtime levy, it may be wise to restrain discretionary powers from ministers on matters such as these. This would make the tax truly representative as it would come straight from the representatives of the people, which is the parliament. But it would also imply extra clarity and certainty, the key components of a healthy tax system.

Linda Lyimo is a Tax Associate with Deloitte Consulting Limited. The views presented are her own and not necessarily those of Deloitte. She can be reached at