Stella Research Complete

St.
Augustine University of Tanzania (SAUT)
Faculty of Social Sciences and Communication
Department of Sociology
Peoples’ Perceptions on the Imposition of New Value Added Tax (Tozo) in Networking
Transactions: Case Study of Nyamagana District Mwanza
NKUNGU, Stella Abel

Reg.BASO78151
A Dissertation Submitted in Partial Fulfillment of the Requirements for the Awards of the
Degree of Bachelor of Arts in Sociology of St. Augustine University of Tanzania
August, 2022
DECLARATION
I, Stella Abel Nkungu, declare that this research report is my original work and has
not been submitted for the award of any other degree in any other university or higher
learning institution
.……………. ……………
Signature Date
i
CERTIFICATION
The undersigned certifies that he has read and hereby recommends for acceptance by
the St. Augustine University of Tanzania a dissertation entitled “An assessment on
peoples’ perceptions on the imposition of new value added tax (Tozo) in networking
transactions” in partial fulfillment of the requirements for award of the Bachelor of
Arts in Sociology.
Mr. MDUGE Alfani, C.
Signature…………… Date…………….
ii
COPYRIGHT
“No part of this Dissertation may be reproduced, stored in any retrieval system, or
transmitted in any form by any means, electronic, mechanical, photocopying, recording
or otherwise without prior written permission of the author or The St. Augustine
University of Tanzania in behalf”
© Stella Abel Nkungu, 2022
iii
DEDICATION
I dedicated this work to my family especially my parents Mr. and Mrs. ABEL for their
moral and material support from the beginning up to the end of my research. Also the
person who helped me throughout this research from the beginning to the end Mr. Mduge
Alfani, C.
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ACKNOWLEDGMENT
I would like to thank Almighty God for blessing me with health and strength from
the moments of my University life and the moment I started proposal preparation until
the day of accomplishment. I am so grateful for my family especially my Father Mr. Abel
Katama you are amazing and the most wonderful father. To my beautiful mother miss
Lydia Dominican, words are not enough to express my gratitude and love I have for you.
To my sisters who supported me materialist and morally May God bless you.
Also, I express my special gratitude toward my research supervisor Mr. Mduge
Alfani, C. for his support from the beginning of the research proposal up to the
submission, he used his time to work with me hand in hand offering time, knowledge,
advising and guiding me on how to accomplish this research dissertation also he was able
to provide necessary information and correction despite his many responsibilities as a
lecture.
Lastly, I express my special thanks toward the department of Sociology at SAUT
Mwanza campus for rising and supporting me academically since first year until now
third year may God bless you all.
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TABLE OF CONTENTS
Declaration..........................................................................................................................i
Certification.......................................................................................................................ii
Copyright..........................................................................................................................iii
Dedication..........................................................................................................................iv
Acknowledgment................................................................................................................v
List of Tables.....................................................................................................................xi
List of Figures..................................................................................................................xii
List of Abbreviations......................................................................................................xiii
Definition of the Key Term............................................................................................xiv
Abstract............................................................................................................................xv
CHAPTER ONE: GENERAL INTRODUCTION..........................................................1
1.1 Introduction....................................................................................................................1
1.2 Background of the study................................................................................................1
1.3 Statement of the problem.............................................................................................11
1.4 General Objective........................................................................................................13
1.4.1 Specific Objectives............................................................................................13
1.5 Research Questions......................................................................................................13
1.6 Significance of the study.............................................................................................14
1.6.1The Citizen of Tanzania.....................................................................................14
vi
1.6.2 The government.................................................................................................14
1.6.3 The other Researchers.......................................................................................14
1.7 Scope of the study........................................................................................................14
1.8 Limitations of the Study..............................................................................................15
CHAPTER TWO: LITERATURE REVIEW...............................................................17
2.1 Introduction..................................................................................................................17
2.2 Theoretical review.......................................................................................................17
2.2.1 The social-political theory.................................................................................17
2.2.2 Benefit-received theory.....................................................................................19
2.3 Empirical literature review..........................................................................................21
2.3.1 Factors influenced the imposition of new value added Tax (Tozo) in
networking Transactions.............................................................................................21
2.3.2 Citizens’ networking transactions after the imposition of new value added tax
(Tozo) in networking transactions..............................................................................25
2.3.3 Peoples’ perceptions on the imposition of new value added tax (Tozo) in
Networking Transactions............................................................................................30
2.4 Research Gap...............................................................................................................44
CHAPTER THREE: RESEARCH METHODOLOGY...............................................46
3.1 Introduction..................................................................................................................46
3.2 Research Approach......................................................................................................46
vii
3.3 Research Design..........................................................................................................47
3.4 Area of the Study.........................................................................................................47
3.5 Population, Sample, and Sampling Technique............................................................49
3.5.1 Target population...............................................................................................49
3.5.2 Sample Size.......................................................................................................49
3.5.3 Sampling Technique..........................................................................................50
3.6 Data Collection Method...............................................................................................50
3.6.1 Questionnaire.....................................................................................................51
3.7 Data Analysis Strategies..............................................................................................52
3.8 Ethical Consideration...................................................................................................52
CHAPTER FOUR: RESEARCH DATA FINDINGS...................................................54
4.1 Introduction..................................................................................................................54
4.2 Research Findings........................................................................................................54
4.2.1 Demographic information of the Respondents..................................................54
4.2.2 Factors influenced the imposition of new value added tax (Tozo) in networking
transactions.................................................................................................................56
4.2.3 Citizens networking transactions after the imposition of new value added tax
(Tozo) in networking Transactions.............................................................................57
4.2.3.1 The extent of the imposition of new mobile money taxation changes mobile
money transactions.....................................................................................................57
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4.2.3.2 Frequency of transferring money via mobile network and via bank in order to
minimize cost..............................................................................................................58
4.2.3.3 Alternatives of sending money to the other persons in order to minimize cost
....................................................................................................................................59
networking transactions..............................................................................................59
4.2.3.1 A good thing to introduce a new value added tax (Tozo) in networking
transactions.................................................................................................................60
4.2.3.2 Advantages of the new value added tax (Tozo) in networking transactions.. 60
4.2.3.3 Disadvantages of the new value added tax (Tozo) in networking transactions
....................................................................................................................................61
4.2.3.4 Elimination of new tax (Tozo) on mobile money transactions......................62
4.2.3.5 The best source to increase revenue...............................................................63
CHAPTER FIVE: DISCUSSION OF THE FINDINGS..............................................65
5.1 Introduction..................................................................................................................65
5.2 Discussion....................................................................................................................65
transactions.................................................................................................................67
(Tozo) in networking transactions..............................................................................69
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5.2.2.1The extent of the imposition of new mobile money taxation changes mobile
money transactions.....................................................................................................69
5.2.2.2 Frequency of transferring money via mobile network and via bank in order to
minimize cost..............................................................................................................71
networking transactions..............................................................................................74
transactions.................................................................................................................74
5.2.3.2Advantages of the new value added tax (Tozo) in networking transactions.. .75
....................................................................................................................................76
5.2.3.5 The best source to increase revenue...............................................................78
CHAPTER SIX: CONCLUSION AND RECOMMENDATION................................80
6.1 Introduction..................................................................................................................80
6.2 Conclusion...................................................................................................................80
6.3 Recommendation.........................................................................................................82
6.3.1To government...........................................................................................................82
6.3.2To society...................................................................................................................82
6.3.3To future studies........................................................................................................83
REFERENCES................................................................................................................84
APPENDIX.......................................................................................................................90
x
LIST OF TABLES
Table 4.1: Demographic information of respondents........................................................55
Table 4.2:Factors influenced the imposition of new value added tax (Tozo) inNetworking
transactions........................................................................................................................56
Table 4.3: Changes of mobile money transaction and occupation....................................57
Table 4.4: Frequency of transferring money via mobile network and via bank in Order to
minimize cost.....................................................................................................................58
Table 4.5: Alternatives of sending money to other persons in order to minimize cost....59
Table 4.6: A good thing to introduce mobile money transactionTaxation and Education
……………………………………………………………………………………………60
Table 4.7: Advantages of value added tax (Tozo) in networkingTransactions.................61
Table 4.8: Disadvantages of value added tax (Tozo) in networkingTransactions………61
xi
LIST OF FIGURES
Figure 4.1: The levels of agreement on the removal of new mobile Money transactions tax........62
Figure 4.2: The best source to increase revenue.............................................................................63
xii
LIST OF ABBREVIATIONS
VAT Value Added Tax
MNOs Mobile Network Operators
GDP Gross Domestic Product
TCRA Tanzania Communication Regulatory Authority
P2P Person to Person
KNBS Kenya National Bureau of Statistics
CAMA Consumer Association of Malawi
MCCCI Malawi Confederation of Chambers of Commerce and Industry
RBM’ Reserve Bank of Malawi
TRA Tanzania Revenue Authority
SPSS Statistical Package for Social Sciences
xiii
DEFINITION OF THE KEY TERM
Peoples’ Perception; According to Wilde (2022) define peoples’ perception is
the way a person forms judgments and makes conclusions concerning the characteristics
and motives of others. Perceptions and judgments of other people are significantly
influenced by the assumptions made about those peoples internal state.
Value added tax(VAT);Schenk &Aldman (2003) defines Value added tax as a
general consumption tax designed to be imposed on all commercial activities involved in
the process of producing goods or rendering services (a general tax) and a tax to be borne
by consumers (a consumption tax). Value added tax is a tax on consumption; the more
you buy the more tax you pay. It is also a neutral tax on businesses in that it does not
represent a real cost to anyone but the end consumer.
Networking Transactions; Means a purchase, return, cash advanced, or other
form of transaction using a Co-branded account other than in a company channel; and the
amount of network transactions for any period shall be calculated as the amount of such
purchases and cash advances, net of the amount of such returns, during such period.
xiv
ABSTRACT
The study aimed to assess peoples’ perceptions on value added tax (Tozo) in
networking transactions at Mkolani ward in Nyamagana district Mwanza. The specific
objectives of the study were; to find out factors influenced the imposition of new value
added tax (Tozo) in networking transactions, to study the citizens networking
transactions after the imposition of new value added tax (Tozo) in networking
transactions and to find out peoples’ perceptions on the imposition of new value added
tax (Tozo) in networking transactions.
The study employed quantitative research approach, specifically cross-sectional
research design, a design that allows the researcher to collect a wide range of data at a
single point in time. Data were collected by using structured questionnaire to a sample
of 50 respondents who were selected by simple random sampling. Data was collected
through structured questionnaire. The data collected were analyzed by the help of the
software called Statistical Package for Social Sciences (SPSS) and presented through
tables, graphs and charts.
The study found peoples’ views on mobile money transaction taxation which the
study found majority of the respond wanted the tax to be eliminated regardless it has
been reviewed and reduced because it leads to many various negative effects.
Based on the findings, it is concluded that the researcher recommended to
government that government should introduce other forms of tax other than the mobile
money tax because it is distorting.
xv
CHAPTER ONE
GENERAL INTRODUCTION
1.1 Introduction
This chapter introduces the topic concerning peoples’ perceptions on the
imposition of new value added tax (Tozo) in networking transactions. The topic aimed to
assess perceptions of Peoples’ towards the imposition of new tax. Under this chapter the
topic addressed by focusing on several sub- sections: background of the study, statement
of the problem, research objectives, research questions, significance of the study, scope
of the study and limitations of the study.
1.2 Background of the study
Mobile money tax transactions have become ubiquitous across most of the
continent over the past decade, and continue to grow in volume and reach (Karambo,
2022). Mobile phone taxes are disproportionate and are way higher in many developing
countries than developed countries (Giray et al, 2011). There are major differences in the
scale of taxation between most developing and developed countries, the value added tax
(VAT) of Mobile transactions in developed countries ranges approximately at a rate of
20.0%, while in developing countries the mobile transactions taxation is higher where the
approximately rate is 31.5% (Clifford, 2020).
In Pakistan, the cost of sending remittances through the mobile is lower compared
to other modes of transactions. On average, cost of sending 200 USD to Pakistan by
using mobile money as a mode of transaction was 2.72% of the amount in the third
quarter of 2018. During the fourth quarter, the cost jumped up to 4.07% of the amount.
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However, it dropped to 1.88% of the amount in the first quarter of 2019 (Rehman et al,
2019).
In United States of America (USA), the cost of remittances from USA through
money transfer operation (MTOs) is around 4% for the amount of 200USD and 6% for
the amount of 500USD. The cost drops sharply after first quarter of 2013 and remains
stagnant for the rest of the period (Rehman et al, 2019). Similarly, the cost of remitting
from United Kingdom (UK) is even lower than that of USA. Moreover, it also meets the
threshold level of 3%. The cost of sending 200 USD from UK through Money Transfer
Operations was around 3% in the first quarter of 2011. It falls to 2% during the period of
2015 (Rehman et al, 2019).While other countries completely removed sector-specific
levies on usage including India (10%) and Malaysia (6%) (Pedro’s and Sivakumaran,
2019).
In Africa the tax burden on mobile phone based transactions in sub-Saharan
Africa has been on the increase whereby the tax of mobile telephony and associated
financial transactions has changed from tax exemption to increased taxation (Ndung'u,
2019). Telecom tax regimes in developing countries have changed significantly over the
last few years. However, major tax provisions are similar across sub-Saharan countries,
with differences only in the rate level. The tax burden includes both consumers and
Mobile Network Operators (MNOs). In doing so, some taxes are borne by networks
through a fall in their profits, while others may be passed through to consumers through
higher prices, or there may be a combination of the two. It depended on the country,
market conditions, and Mobile Network Operations (MNOs') strategies (Silue, 2021).
2
Taxes on mobile money considerably reduce the capacity of the industry to invest
in the activity because states generally tax consumption than production. Of the 37
countries in sub-Saharan Africa with mobile money, 7 countries have recently started to
tax mobile money service (Silue, 2021). In doing so, 3 of these seven countries have
chosen to introduce excise duties tax on mobile money operators revenue, while 4
countries have chosen excise duties on the transaction. Ghana is also considering
introducing a tax aimed at operators rather than subscribers. Thus, the aim of these excise
duties is not to reduce negative externalities by making consumers bear a social cost to
the pigouvian logic instead of raising revenue through these excise duties, governments
aim to help finance public expenditure (Silue, 2021).
Excise tax on mobile money; This tax was introduced in countries very recently,
some countries, namely Côte d’Ivoire and Democratic Republic of Congo (DRC), have
decided to apply the tax on the profit generated by the activity. In doing so, the tax
burden is generally transferred to consumers through an increase in tariffs. Ndung’u
(2019) shows that the M-Pesa tariffs for most transfers and withdraws ranges have
increased since introducing the excise tax on financial services in 2013 and update in
2018. Kenya, Malawi, Tanzania, and Zimbabwe have chosen to tax transactions directly
at 12%, 1 %, 10%, and 2%, respectively (Silue, 2021).
“Regulatory Approaches to Digital payments Transaction Costs in Sustaining
Financial Inclusion in Africa”, (2021) observed that before 2017 taxation was present in
the mobile sector only with designer telecom service that generated a sizeable portion of
the tax contribution in African countries. As mobile money continued being a booming
sector, some policy makers in countries like Republic of Congo, Ivory Coast, Malawi,
3
Uganda and Zimbabwe developed an interest to tax mobile money services, due to the
increasing turnover of transactions (African financial Inclusion Policy Initiative,
2021).These taxes were levied as excise duty on mobile money transactions fees. Mobile
money sector-specific taxation has emerged in Africa, taking various forms, including the
expansion of current excise in certain countries (African financial inclusion policy
initiative, 2021).
Value Added Tax (VAT) is a tax on consumption. It is a multi-point levy
collected in installments at each stage of production. The final and total burden of this tax
is borne by the domestic consumers of goods and services (Asther&Ahuja, 2007). Value
added tax is levied on sellers of goods and services based on value added by their
respective units. The base for Value added tax is determined by value added at a
particular stage of production or distribution. In other words, inputs of a firm are not
taxed. At each point, the firm is reimbursed the tax which it has already paid at the time
of purchasing the inputs.
Schenk &Aldman (2003) defines Value added tax as a general consumption tax
designed to be imposed on all commercial activities involved in the process of producing
goods or rendering services (a general tax) and a tax to be borne by consumers (a
consumption tax). Value added tax is a tax on consumption; the more you buy the more
tax you pay. It is also a neutral tax on businesses in that it does not represent a real cost to
anyone but the end consumer.
Value added tax (VAT) was first introduced in Europe in 1954, in France. In
1967, the Member States of the European Economic Community, as it was then, agreed
4
to replace their national turnover tax systems with a common Value added tax system.
Since then, Value added tax has been introduced in around 1401 countries worldwide. By
2008 Value added tax receipts accounted for 21.4% of the national tax revenues of
European Member States (including social security contributions), a rise of 12% since
1995. It is thus a major source of revenue for national budgets and in many Member
States it is the main source. Value added tax receipts represented in 2008 on average
7.8% of the Gross Domestic Product (GDP) of a Member State, a figure that has
increased by almost 13% from 1995, (Com, 2010)
In Ukraine the Value added tax has become the workhorse of the revenue system.
In 2001, for example, almost half (47%) of state budget revenues came from Value added
tax, which accounted for 5.1% of Gross Domestic Product (GDP). Value added tax is the
largest, most important, tax in Ukraine. The design and implementation of Value added
tax is thus a critical determinant of the performance of the entire fiscal system, (Bird,
2005).
In Tanzania the Value Added Tax was mainly introduced to replace the Sales Tax,
which was unable to generate sufficient revenue as it was narrow based. Main reasons for
introducing Value added tax were to broaden the tax base, to attain economic neutrality,
to promote exports, and to attain its administrative advantages. Further, since its
introduction, Value added tax has been more revenue productive than sales tax, (Teffera,
2004). To sustain Value added tax revenue role in the governments finance, it is
important to ensure that the revenue generated by this tax is raised efficiently as possible.
The inadequate revenue performance of Value added tax may be caused by factors
including poor Value added tax administration, and the incapacity of tax authorities to
5
implement the attributes of the tax in practice. A good tax administration is essential in
fully implementing the design features of Value added tax and achieving governments
policy objectives at large, (Mikesell, 2007).
Most taxes can be divided into three basic types namely: taxes on what you earn
taxes on what you buy, and taxes on what you own. Taxes on what you earn; under this
category there is specific taxes found at this type which are: Individual Income taxes,
corporate income taxes, pay roll taxes, and capital gains taxes.
Individual income taxes; an individual income tax (or personal income tax) is
levied on the wages, salaries, investment, or other forms of income an individual or
household earns. Many individual income taxes are progressive, meaning tax rates
increase as a tax payers income increases, resulting in higher-earners paying a large share
of income taxes than lower-earners.
Corporate income taxes (CIT); this is levied by federal and state governments on
business profits, which are revenues (what a business makes in sales) minus costs (the
cost of doing business).
Pay rolls Taxes; Are taxes paid on the wages and salaries of employees to finance
social insurance programs. Most taxpayers were familiar with payroll taxes from looking
at their pay stub at the end of each pay period, where the amount of payroll tax withheld
by their employer from their income is clearly listed. For example in U.S, the largest
payroll taxes are a 12.4% tax to fund social security and a 2.9% tax to fund Medicare, for
a combined rate of 15.3 % (Bellafiore, 2019).
6
Capital Gains taxes; Capital assets generally include everything owned and used
for personal purposes, pleasure, or investment, including stocks, bonds, homes, cars,
jewelry and art. In jurisdiction with a capital gains tax, when a person realizes a capital
gain example, sells an asset that has increased in value they pay tax on the profit they
earn.
Taxes on things you own, under this category there is property taxes. Property
taxes are primary levied on immovable property like land and buildings and are an
essential source of revenue for state and local government. In U.S. account for over 30%
of total state and local tax collections and over 70% of total local tax collections. Local
governments rely on property tax revenue to fund public services like schools, roads,
police and fire departments, and emergency medical services.
Taxes on what you buy, under this category there is excise duty taxes. Excise duty
taxes; is a duty charged on specific goods and services manufactured locally or imported
on varying rates. It is charged in both specific and ad valorem rates. An ad valorem tax
(Latin for “according to value”) is a tax whose amount is based on the value of
transactions or property (Kagan, 2022). It is typically imposed at the time of a
transaction, as in the case of a sales tax or value added tax (VAT). Items charged under
specific rates include wine, spirits, soft drinks, mineral water, and cigarettes. But items
charged under ad- valorem tax include Money transfer services, electronic
communication services, imported furniture, and motor vehicles. This study based in this
kind of tax known Excise duty tax which normally most of the countries experienced the
highest burden in paying this kind of tax in mobile money transaction.
7
In Tanzania, a mobile money tax was first introduced in 2013 when an excise
duty taxes of 0.15% was charged on transfers exceeding Tanzanian shilling 30,000
(Strusani,2015). The tax was then replaced in 2014 with the current mobile money fee
excise tax of 10%. Since the mobile money excise is charged on transfer fees, the tax is a
larger share of the cost for smaller transfers. Therefore, this tax was regressive and
imposes a larger burden on poorer consumers, which could potentially reverse financial
inclusion gains made in Tanzania.
From 1 July 2021, Tanzania introduced a new tax on mobile money transfer and
withdrawal transactions, at a rate of 0.1% (Atalayar news, 2022), excluding merchant,
business and government payment transactions effective on 15 July. This levy applies in
addition to Value added tax (18%) and excise duty on mobile money transfer and
withdrawal fees (10%) (GSMA, 2021). However, before the tax was introduced in
Tanzania there were other chargers on mobile money (for example on Airtel-money,
Airtel-money customers were being deducted only shilling 350 on line to send between
shilling15000 and shilling 19,999 while sending the same amount to different network
used to cost shilling 550, Moreover, withdrawing the money used to cost shilling 1400
(Malanga,2021). But due to the imposition of new value added tax(Tozo) in mobile
transactions the changes occurred from various networking such as M-pesa, Tigo-pesa,
Airtel-money, Halo-pesa for example the amount of government levy to be paid when
transferring, withdrawn between shilling 15000 and shilling 19,999 was totally higher
compared to before from different networking. For example, in Airtel-money, Airtel-
money customers started to pay shilling 610 to send shilling 15,000 also to send money to
8
other network they payee shilling 1,160 and when they want to withdraw they payee
shilling 20,10 (Malanga, 2021)
According to Mobile phone operators, millions of customers, especially in rural
areas stopped their mobile money transactions because of the increased costs. The
taxation also affects mobile money transactions from German to Tanzania example, to
family members or in the context of partnerships (Tanzania Net Talk, 2021). However,
the situation made people to complain that the mobile money transactions cost become
too high, while business people said their business adversely affected as people were
avoiding the costly mobile phone transactions and online purchases (Onyango, 2021).
According to the Tanzania Communication Regulatory Authority (TCRA) reports
for the third quarter of 2021, Vodacom has lost 954,657 customers between June and
September. The latest September report shows that, in June 2021 the network had 13.61
million M-pesa users who dropped to 12.66 million while Vodacom lost customers,
networks offering Airtel money, Halo money, Tigo money, TTCL money and Ezypesa
received an increase in customers. Airtel received an increase of 169,876 customers,
Halotel 295,457, Tigo 227,763, TTCL 124,572 and Zantel 9,199 (Simtowe, 2021).
Following the announcement of the new mobile tax of 0.1% on July 15, 2021 on
all mobile money transactions, the public brought many complaints to the government
due to the situation seems to differ from what used to be the case in the past when the
deduction was made to the recipient only but now the prize is eating away at both parties.
On 19 July 2021, the President of Tanzania tasked the Minister of Finance and planning
to review the mobile money levy following concerns from the general public regarding
9
the cost of mobile money transactions. Simultaneously, the application base was
extended to include bank and financial institution transactions performed through a
mobile phone. Other types of bank and financial institution transactions such as over the
counter, Automatic Teller Machine transactions and transactions performed through
devices other than mobile phones (example, personal computers) are not subject to the
mobile money levy (GSMA,2021).
On the 30th September, 2021 the government of Tanzania lowered the amount of
tax on mobile money which was imposed in July by 30% of transaction value, mobile
money reduced marginally by 15% on average compared to fees applicable in July and
August due to the levy reduction by the government and the reduction of fees by mobile
money operators. From September 2021, mobile money operators reduced their fees to
make mobile money services more affordable and counter the negative effects of new
levy (GSMA, 2021). Due the changes occurred the ranges also from different networks
changes and become permanent used on 3 September 2021 where the amount where at
this value for example in case of Airtel-money, Airtel-money customers being deducted
shilling 427 to send between shilling 15,000 and shilling 19,999 as the government levy
also to send to another network being deducted shilling 977 and when they want to
withdraw they being deducted shilling1827 (Malanga, 2021).
Despite the reduction of mobile money transaction costs in September 2021,
mobile money users still face significant increase in transaction cost compared to June
2021.The issue of new tax on telephone transactions (Tozo) brought misunderstanding
between government and citizens because the issue seems to be a thorn in the side of
citizens, the government tried to reform that new tax but still people lamenting to the
10
extent that the tax still at higher level where by many grievances arisen which caused
business to falter but the things seem to hurt people the most is that of the deductions
being done more than twice, namely the sender and the consumer. This situation is
different from what used to be the case in the past when the deductions were made to the
recipient only but now the deductions occurs to both parties (Njogopa, 2021).
This study created awareness to some citizens’ whom they face this problem
during transactions process. It creates good understanding of knowing where that new
tariffs (Tozo) go.
1.3 Statement of the problem
Mobile tax transactions have become ubiquitous across most of the continent over
the past decade, and continue to grow in volume and reach (Karambo, 2022). Mobile
phone taxes are disproportionate and are way higher in many developing countries than
developed countries (Giray et al, 2011). There are major differences in the scale of
taxation between most developing and developed countries, the value added tax (VAT) of
Mobile transactions in developed countries is 20.0% while in developing countries the
mobile transactions taxation is higher where its rate is 31.5% (Clifford,2020).
In Tanzania the issue of mobile money taxation has increased at a rate of 0.1%
depending on the amount sent and withdrawn on 15 July 2021(Atalayar news, 2021)
which makes people to complain much concerning this high value of levy in financial
transactions. In spite of all these, the rise of mobile money taxation has led to the
occurrence of impact in Tanzania where by majority of customers in rural areas
11
approximate millions of customers stopped their mobile money transactions because of
the increased costs (Tanzania Net Talk, 2021).
In 2021, the Tanzania government introduced the so called “patriotic tax”
(Makoye, 2021). The tax was highly criticized by the citizens with critics calling it is a
burden on poor Tanzanians who are being made to pay more while sending or receiving
money via mobile phones (Makoye,2021) also the tax is likely to harm a thriving telecom
industry and affect the financial inclusion agenda. Due to many critics government
decided to reduce the levy by 30% as well as the fee for sending money from one mobile
network to another has also reduced by 10% (Komba, 2021).Mobile money reduced
marginally by 15% on average compared to fees applicable in July and August due to the
levy reduction by the government and the reduction of fees by mobile money operators
(GSMA, 2021).For example in case of Airtel-money, Airtel-money customers being
deducted shilling 427 to send shilling 15,000 as the government levy also to send shilling
15000 to another network being deducted shilling 977 and when they want to withdraw
being deducted shilling 1827 to withdrawn shilling 15,000 (Malanga, 2021).
Despite, the patriotic tax has been reduced by 30% but still seems to be a thorn to
peoples’ because many peoples’ lamenting that the tax still at higher level. Many various
studies have conducted on the issue of mobile money tax especially on the effect of
mobile money transactions taxation to consumers, and not tackled on the issue of
perceptions of peoples’ on the imposition of new value added tax (Tozo) in mobile
money transactions.
12
Therefore, this study showed peoples’ perceptions on the imposition of new value
added tax (Tozo) in networking transactions despite the patriotic tax has been reduced by
30% so that to know if there is possibility of the government to find other solution
concerning this issue or to remove the mobile money transaction taxation.
1.4 General Objective
The main objective was to assess peoples͗ perceptions on the imposition of new
value added tax (Tozo) in networking Transactions.
1.4.1 Specific Objectives
i. To find out factors influenced the imposition of new value added Tax (Tozo) in
networking Transactions
ii. To study the citizens networking transactions after the imposition of new value
added tax (Tozo) in networking transactions
iii. To find out peoples’ perceptions on the imposition of new value added tax in
networking Transactions.
1.5 Research Questions
i. What are the factors influenced the imposition of new value added Tax (Tozo) in
networking Transactions?
ii. What are the citizens networking transactions after the imposition of new value
added tax (Tozo) in networking Transactions?
iii. What are peoples’ perceptions on the imposition of new value added tax (Tozo) in
networking Transactions?
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1.6 Significance of the study
1.6.1The Citizen of Tanzania

The study enabled citizens to determine exactly what kind of tax to be paid as
well as the amount of money to be paid depending on the value of each transaction. Also
citizens were able to know exactly how do that paid tax has been used in what kind of
activities so through that they were able to capture all the matters concerning the new
one tax (Tozo) in Networking Transactions.
1.6.2 The government
The study helped the government on how to find new sources of income rather
than continuing to rely on the same sources all the time, so that to expand the revenues of
government rather than introducing tax which hinders the whole system of economy to
people as well as makes people hurt in one way or another.
1.6.3 The other Researchers

This study was also serve as a stepping stone to other researchers on the same or
similar topics by suggesting areas that need further studies as well as it will provide light
to the other researchers of the same field as it will act as reference.
1.7 Scope of the study
The study aimed to assess peoples’ perceptions on the imposition of new value
added tax (Tozo) in networking transactions. This study was carried out in Nyamagana
district which is one of the seven districts of Mwanza region of Tanzania. Nyamagana is
bordered to the north by Ilemela district, to the east by Magu district, to the south by
Misungwi district and to the west by the Mwanza bay of Lake Victoria. The district was
divided into eighteen administrative wards and according to the 2012 census the district
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had a population of 363,452 but only ward from Nyamagana district was a sample to be
investigated, which was Mkolani ward which had a population of 32,199 where by male
15,716 and female 16,483. The area was a researcher source of data to present others.
The other wards were not included in this study because of time and financial constraints.
1.8 Limitations of the Study
Financial problem. The researcher faced the financial problem during the process
of data collection especially transport fee, money for typing, printing, buying some
materials such as pens and papers. So this problem affected much the whole process of
conducting research. Therefore, in solved this problem the researcher used her own
money which she was saved before during research activity.
Limited Time. The study took a lot of time to conduct, so it interfere the time
table of classes. So a researcher was getting hard time to conduct her study because of
interference of time table of lectures. Therefore the problem of time was solved by
ensuring that there was a separate time in conducting different activities.
Unwillingness of respondents to participate in the study or respond to some
questions. Some respondents were not respond to some questions or disagreed to involve
in the study. This is because, some thought that it was a profitable work while some of
them were demand money from researcher so that to fill or answer the questionnaire, it
was a difficult to convince them to leave their activities and focus to the questionnaire.
Therefore, the researcher solved this through showed them the authority letters from
regional office and District office which identify the researcher in the field of data
collection.
15
Illiteracy among the respondents. The researcher meets with people who don’t
know how to read and write. This situation caused hardship for her because the
respondents’ don’t know how to read and to write. Therefore, it was a challenge for her to
make sure she obtained data from that type of respondents without losing them.
Therefore, the only way which used to obtain data was to ask the respondent questions
from questionnaire and tell them the multiple choices and put tick on the choice chosen
by a respondent.
Cultural differences. This also was a challenge especially in language as a cultural
aspect, because the language which used in research tools of data collection was English
and most respondents were not understand English. Therefore, the solution solved by
translating to them in their language (Kiswahili) and turns back their answers to English.
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CHAPTER TWO
LITERATURE REVIEW
2.1 Introduction
This chapter present the review of the previous study of both theoretical and
empirical literature review where by the findings were obtained into books, magazine,
newspaper and Journals. The review of the previous study considered area of strength and
weakness and at the end the general review held to identify research Gap.
2.2 Theoretical review
This study used only two theories that were Social-political theory by Adolph
Heinrich Gotthelf Wagner in 1835 and Benefits-received theory by Thomas Hobbes, John
Locke and Grotius in 1651. The theories reviewed by considering the pioneer developer
of the theory, a year which the theory developed, factors influenced to develop the
theory, main argument of the theory, supporting idea to the main argument as well as
weakness and strengths of the theory.
2.2.1 The social-political theory
Social-political theory is a theory which based on conflict perspective. This theory
was developed by a German scholar Adolph Heinrich Gotthelf Wagner in 1835. The
main factor to develop this theory was income inequalities arising out of the right to own
property and inheritance which influence him to write this theory. Social-political theory
of taxation state that, “The social and political objectives should be the major factors in
designing a tax system”.
17
This theory advocated that a tax system should not be designed to serve
individuals, but should be used to cure the ills of society as whole. The social and
political objectives should be the cornerstones in designing a tax system. Wagner urged
in his theory that a society consisted of individuals’ members. He further said that the
society had an existence and an entity of its own which needed preservation and taking
care of. Wagner was specifically in favor of using taxation for reduction of income
inequalities and to achieve these objectives, he advocated for small incomes to be
exempted from taxation. In other words, the tax structure should aim at achieving social
objectives. He advocated that the government should follow the policy of progressive
taxation. Since progressive taxation is the rule rather than the exception in modern
context, we may extend Wagner’s stand by including other social and economic
objectives of the society in which taxation could be a useful tool. These include curbing
down cyclical fluctuations, unemployment, production of undesirable goods and services,
monopolistic and restrictive trade policies.
This theory has however been subject to its own strength which is; the ideas in
this theory are now the hall marks of modern states fiscal policies. Taxation in modern
state is generally to curb inequalities arising out of the right to own property and
inheritance. Also this theory has their limitation which is; the concept is more of
academic nature rather than of much practical relevance. This is proved by the fact that
the government follows the policy of progressive taxation; the gap between the rich and
the poor has been increasing at a very fast rate. This policy has encouraged lot of tax
evasion either an account of loopholes or by adopting such methods that lead to tax
18
evasion, the problem of taxation has led to the operation of a parallel economy which is
causing inflation in the economy.
Therefore, this theory is directly connected to the study. Government imposing
the value added tax (Tozo) in networking transactions so that to achieve the social
objective like to serve the whole society at large especially on constructing health centers
and classroom, and to fund other social projects.
2.2.2 Benefit-received theory
Benefit-received theory is a theory which based on conflict perspective. Benefit-
received theory was advanced in the 17 th century (1651) by the English philosophers
Thomas Hobbes, John Locke and Grotius. One among of the factor influences them to
write this theory is the unjust in taxation because most of the rich people are the ones
who pay more than poor ones so here the poor do not pay more and are the ones who gets
more benefits than the rich from the expenditure of the government so this is clearly
unjust and as such an unacceptable proposition. Benefit-received theory states that
“Every citizen should be called upon to pay taxes in proportion to the benefits derived by
him from services provided by the government”.
It is implied that the state provides certain facilities to its civilians who should
therefore, contribute to the cost or value of these facilities in proportion to benefits
received by them. The more the benefit a citizen derives the more taxes he should bear.
According to this theory the burden of taxation should be divided among the people in
proportion to the benefits received from the state as an indicator of the benefits received.
Normally income is sometimes used as an indicator of the benefits received. In this case,
it is assumed that without the protection of the state of the economy cannot exist and
19
accordingly it may be inferred that benefits that each member of society derives from the
state are in proportion to his income.
This theory has however been subject to its own strength which is; a benefit-
received system of taxation is that the choice to pay the tax and receive the service is
ultimately in the consumer’s hands. That means that the government has to be sure to
provide a worth wile service. Also this theory consists of severe criticisms such as;
Firstly; it is difficult to measure the benefits received by each individual from the
goods and services supplied by the state. This is because a benefit is ultimately subjective
thing and cannot be estimated directly. The theory assumes that the benefits are
independent by each other such that benefits that any individual enjoys depends only
upon his own consumption of state services and that it makes no difference to him as to
who else is consuming them and how much.
Secondly; the theory does not recognize the objective of the equity in taxation.
Though it is occasionally mentioned, it is not generally accepted as part of the theory.
The relationship between the public and the government is reduced to a semi-commercial
nature. Most basic functions of a good government like helping the needy, protecting the
helpless and so on are ruled out according to the benefits-received theory.
Thirdly; the assumption that the tax should be paid by an individual in proportion
to benefit conferred by the state on that individual, is quite unrealistic because the
benefits derived cannot be correctly measured in terms of money. Benefit is purely a
subjective matter and there is no scientific way to measure the magnitude of benefit and
its money value.
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Fourthly; the theory does not tell us what to do if the tax collections based on
benefits-received do not match government expenditure. Likewise, no interconnection
between tax collections and other sources of government like gifts and profits from
currency is brought to the lime light. A modern economy is generally faced with the
problem of economic growth (undeveloped economies) and or stabilization (developed
economies). The benefit received theory is able to guide the government in this sphere
because the benefits accruing to the economy as a whole cannot be apportioned among
individual members of the society.
Therefore, this theory is related to this study where by the government impose the
tax on mobile money transactions but the tax tends to be cut down to all people
depending on the amount sent or withdrawn without regarding whether you’re a rich one
or poor the more money you sent its where the tax being cut down. So the choice to send
money to other relatives depends to the individual who have the money and the choice to
be cut down the tax it depends to the person who need to send the money.
2.3 Empirical literature review
A researcher reviewed the previous study conducted by other researchers that
related to the current study based on the specific objectives. And each specific objective
reviewed by considering some methodologies and findings.
2.3.1 Factors influenced the imposition of new value added Tax (Tozo) in
networking Transactions
According to Alfred (2021) explore on the smooth charges and Financial
Transactions Deloitte Tanzania’s Digital meaning in Tanzania. He found out the decline
21
of economy in Tanzania is one among the driving force for the imposition of mobile
money taxation. He found the economic situation has been severely affected by the
COVID-19 crisis, where Tanzania’s economic growth is reported to have dropped to
4.8% from 7.0% with sectors such as Tourism losing much of their revenue of 70 %
(Alfred, 2021). In a bid to fund new sources of revenue, the government led by President
Samia Suluhu Hassan proposed a tariff of mobile money transactions depending on the
ability to increase the balance (Alfred, 2021).
Sippy (2021) on Tanzania’s new mobile money tax is a blow to the booming
sector argued that mobile money has since the backbone of a broad range of public
services, including health, education, and social protection. However, with the COVID-
19 pandemic hitting Tanzania’s economy hard, the government introduced the new tax
(Tozo) in an effort to raise its revenue collection to finance the 2021/2022 national
budget. Due to this imposition the proposal was expected to increase government revenue
by shilling 1,254,406.14 million.
Solomon & Magumba (2015) conducted a study on Taxation of the
Telecommunications sector: A focus on policy issues and consideration in Taxation of
mobile money in Uganda through a qualitative approach based on structured interview
and focus group discussion. He used stratified sampling design to a sample size of 68
participants and found that the basic drive behind the introduction of excise duty tax on
mobile money was the need to increase tax revenue.
Clifford (2020) examines the motivations behind the imposition of mobile money
taxation and consequences in Uganda, Democratic Republic of Congo, Cote d’Ivoire,
Malawi through a largely qualitative approach based on semi-structured interviews. The
22
author found the driving force for the imposition of mobile money was largely driven by
Tax policy weakness, Administrative weakness, and political economy factor.
International Monetary Fund (2018) argued that African countries could increase
their tax revenues by an average of 5% annually if comprehensive tax reforms were
carried out. In cash-strapped Zimbabwe, a deeply unpopular 2% tax on electronic
transactions was introduced in 2018 in a bid to address tax shortfalls created by a
shrinking formal economy. After years of economic hardship severe cash shortages have
led to a spike in electronic transactions, retting most people in the catchment of the new
levy.
Pushkareva (2021) conducted a study on Taxing Times for Development: Tax and
Digital Financial Services in Sub-Saharan Africa in Zimbabwe and found that after
Zimbabwe facing increasing inflation and currency shortages for a while, in autumn 2018
the Zimbabwean Ministry of Finance announced an increase in tax on mobile wallet and
electronic transformation from a flat 0.5% to 2% for each dollar transacted. Thus, for any
one spending over one dollar in such transactions and increase in tax represented a
significant addition cost of using digital financial services. The rationale behind the tax
policy change was collecting additional revenues to address fiscal deficit faced by the
government and stabilize the economy.
Bankman and Schler (2007) on tax planning under the flat tax in Washington
argued that some countries persist in reducing their value added tax rates for the purpose
of creating an attractive environment for investment, while others are concerned about
increasing tax revenues to provide funding for public services and to assist in reducing
public sector deficits. Nonetheless, taxes are needed to generate revenues so that
23
government can fund social programmers and public investment that stimulate economic
growth and development.
Osman (2022) on with soaring debt, Ghana considers controversial mobile money
tax in Ghana; found that Ghana’s has debt nearly doubled in 10 years. At the end of
November 2021, it hit about 78% of its gross domestic product, up from about 40% a
decade ago. As part of its austerity measures, the Ghanaian government proposed a
1.75% tax on mobile money transactions. The government has explicitly said that the
justification for the 1.75% levy on electronic transaction is because government revenues
have declined significantly due to COVID-19 pandemic.
African Financial Services (2022) argued that a number of sub-Saharan Africa
countries have sought to introduce taxes on electronic transactions, in response to a
sustained uptake prompted by the pandemic. COVID-19 and its knock-on effects gave
rise to a sharp increase in electronic payments across this African Continent-a trend that
is set to continue while such moves have been met with criticism, they represent an
opportunity to significantly boost tax revenue. KeniOfori-Atta the minister of finance in
Ghana said it would help to widen the tax net, and increase the country’s tax –to-Gross
domestic product (GDP) ration from 11% to 16%.
Rene et al (2022) conducted a study on a legal and review of the money transfer
tax in Cameroon through a qualitative approach based on reviewing the existing
literatures, journals and articles where they found the motivating reason for the
advancement of taxes are common across developing countries such as; structural
weakness at policy level, lack of capacity within research units and also lack of national
policy frameworks.
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2.3.2 Citizens’ networking transactions after the imposition of new value added tax
(Tozo) in networking transactions
In Tanzania, the competition for mobile financial services has caused some
companies to lose customers and others to gain. The decline of customers in some
companies, especially those in financial services, has also been attributed to the increase
in phone transaction fees imposed by the government (Simtowe, 2021). According to the
Tanzania Communication Regulatory Authority (TCRA) reports for the third quarter of
2021; Vodacom has lost 954,657 customers between June and September. The latest
September report shows that, in June 2021 the network had 13.61 million M-Pesa users
who dropped to 12.66 million while Vodacom lost customers, networks offering Airtel
money, Halo money, Tigo money, TTCL money and EzyPesa received an increase in
customers. Airtel received an increase of 169,876 customers, Halotel 295,457, Tigo
227,763, TTCL 124,572 and Zantel 9,199 (Simtowe, 2021).
As September, 127,783 customers had stopped using financial services via mobile
phones, and started use banks whose deductions are lower compared to the phone while
others they travel to send money to one location go another in his region at a cost less
than 1,000 to avoid such deductions (Geofrey & Mwakangale, 2021), bringing the total
number of users to 33.154 million from 33.282 million in June 2021.
The citizen Newspaper quoted Mwola who states that “The decline in customers
was due to increase competition between telecommunications service providers and
telephone transactions fees”. Despite losing those financial users, Vodacom remains at
the fore front of financial services market ownership with 12,660,205 customers’
equivalent to 38% of the market. Tigo money follows with 25% market share, Airtel
25
money 21%, HaloPesa 11%, TTCL 3% and EzyPesa with 2 % (Simtowe, 2021). In
December customers’ numbers have recovered compared to September 2021, mainly
because the tax was reduced by 30% but the number of customers is still lower than the
peak of June 2021 (RIS, 2022).
GSMA (2021) on Tanzania Mobile Money Levy Impact Analysis argued that,
despite the reduction of mobile money transaction costs in September 2021, mobile
money users still face significant increase in transaction cost compared to June 2021. For
example, the average fee for a transfer between TZS 40,000 and 49,999 ($17 – $22)
evolved between June and September 2021. Between June and September 2021, the cost
of person to person (P2P) transfer increased by 258% (on-net transactions) and 133%
(off-net transactions. The cost of cash-out transactions increased by 45% over the same
period. Until June 2021, Tanzania’s average transaction fee was in line with the average
for East Africa. However, from July2021 Tanzania’s average transaction increases to
about 3 times the average fee for East Africa.
Following the introduction of the mobile money levy, the number of person to
person (P2P) transfers and cash-out transactions fell heavily in July and August 2021 to
only slightly stabilize in September 2021. Since then and until December 2021, the
market has slowly started to recover but on a lower growth trajectory. As mobile money
transactions became more expensive on account of the new levy, mobile money users
rapidly reduced their usage of mobile money in favor of alternative payment methods
such as cash. This is reflected by the sharp decrease in the total number of person to
person (P2P) transactions (-38%). The change in consumer behavior leads to increased
use of cash, reversing gains Tanzania had made in going cashless. Transitioning to
26
cashless increases convenience and efficiency in the economy and reduces the cost of
cash for the Government. Between June and September 2021, the total number of P2P
transactions reduced drastically from 30 to 18 million (-38%) per month, while the total
number cash-out transactions reduced from 33 to 25 million (-25%) per month. (GSMA,
2021)
In addition to reducing their usage of mobile money, users also removed their
assets from their mobile money accounts to use them through alternative payment
methods such as cash. Indeed, despite the transaction cost increase and the high reduction
in cash-out transactions, the average value per cash-out transaction increased by 7% from
TZS 72,700 to 73,400 between June and July 2021. This suggest that while mobile
money users made less cash-out transactions to avoid paying the increased fees, they
cashed-out higher amounts in July compared to June. Transactions in the middle (TZS
15,000 – TZS 399,999) and high (above TZS 400, 00) bands suffered the highest
reductions in person to person (P2P) transfers. While the number of low value person to
person (P2P) transactions reduced by 26% between June and September, the number of
middle and high-value transactions reduced by 54% and 63% respectively. This may
reflect the sensitivity of mobile money users to price (GSMA, 2021).
Haberler newspaper (2021) on Experts that patriotism tax will affect telecom
sector and hence reduce government revenue quoted Tamnoa chairman, Hisham Hendi
who is also the CEO of Vodacom Tanzania telecom service provider claimed that
millions of customers had stopped using their services, especially those in rural areas, due
to rising costs which threatened their business.
27
RIS (2022) explore on what happens when you raise taxes on mobile money in
Tanzania and found that, in December 2021 Vodacom Tanzania reported its quarterly
results. Between June 2021 and September 2021, the number of customers dropped by
17%. Vodacom Tanzania does not report M-Pesa transactions value between December
2020 and December 2021 dropped by 24.8%. Both of these are massive declines.
Customers’ numbers have recovered in December 2021 compared to September 2021,
mainly because the tax was reduced by 30%, but the number of customers is still lower
than the peak of June 2021.
In Uganda, Solomon and Magumba (2015) conducted a study on Taxation of the
Telecommunications sector a focus on policy issues and consideration in Taxation of
mobile money in Uganda through a qualitative approach based on structured interview
and focus group discussion. He used stratified sampling design to a sample size of 68
participants. This study show the tax was introduced on withdrawal charges on 1 August
2014 leading to an immediate increase in the transactions. This lead to a decline in both
volume and value of the transactions reaching the nadir (Lowest) in September. However,
in October and November there was an increase in both volume and value of transactions
exceeding even July’s transactions by December. The Airtel Uganda legal and
Regulatory director Denis Kakonge, said since the introduction of the tax, the volume of
their mobile money transactions has dropped by 33%. Also he says the tax is not only
discriminative but people have no option but keep the money in cash, which is risky
(URN, 2018).
UNCDF (2021) did a survey study on the impact of mobile money tax in Uganda.
He used purposive non-probability sampling design to a sample size of 303 participants.
28
His findings revealed that, 38% of respondents they switched to other alternatives such as
agent banking or cash. Some respondents switched back to cash, explaining that, “The tax
is so high that sometimes they have to get a boda-boda (Motorcycle taxi) to deliver the
cash physically”.
In Uganda the survey conducted by UNCDF (2021) on the impact of mobile
money tax in Uganda. He used purposive non-probability sampling design to a sample
size of 303 participants. The findings revealed that, 38% of respondents used mobile
money less after the introduction of the tax. Low-income users were unduly affected by
the withdrawal tax, compared with higher income groups.
Whitehead Communications (2018) conducted a study on Uganda Social Media
and Mobile Money Taxes Survey Report through a mixed approach based on face-to-face
interviews and Survey method. They used sample size of 2918 people which they
revealed that 93% of respondents reported that they used Mobile money in the last
months when asked how their mobile money use changed since the implementation of the
new tax in mobile money transactions.
Whitehead Communications (2018) conducted a study on Uganda Social Media
and Mobile Money Taxes Survey Report through a survey method to the sample size of
2,331 respondents, which revealed that since the implementation of tax (90) 4% reported
that they were transacting more money in July, (58) 2% were transacting about the same
as before, (1,027) 44% were transacting less money in July and (1,101) 47% reported that
they had completely stopped transacting mobile money after the implementation of the
new tax.
29
Oni (2022) reported on the survey conducted by UNCDF who revealed that, about
57.4% of high-income respondents started using agent banking as a direct result of the
tax compared to 11.1% of low income respondents who could not better access
alternatives where similar tax is not applied. Overall, there was a drastic decrease in
transaction value after the tax was introduced of over 50% where higher income users
more likely to engage higher-value transactions migrated away from mobile money.
In Kenya, Ndung’u (2019) did a study on Taxing mobile phone transactions in
Kenya where he argues that the growth in electronic payments in Kenya seems to follow
economic cycles but has generally slowed from annual average of 12.2% from 2010 to
2013 to an annual average of 7% from 2014 to 2017 after the introduction of the excise
tax on financial services. The persistence increase in mobile transactions chargers is
likely to slow down the use of the platform, especially by the poor whose median
transactions is Ksh 2,500 and who are more sensitive to costs.
Networking Transactions
In Tanzania, in the beginning of Thursday, July 15, 2021 senders and Cashiers’
through mobile phones, began to pay patriotic taxes (Tozo) that increased the cost of
sending and withdrawing money 11 times as it was in the beginning, a situation described
as causing pain for many. Some citizens have said the new levy is another burden for
low-income people, especially in rural areas where mobile phones are the savior of
financial services due to lack of banking services (Mwanachi News, 2021).
“The new levy is a pain for low-income citizens who are the main users of mobile
transactions,’’ said Abdallah Khatib Masoud a resident in Unguja, citing a client
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sending shilling 100,000 to deduct shilling 6,100 compared to previously levy
shilling 3500”. Also another citizen Monica Samson, a resident of Bariadi in
Simiyu Region, blamed the government for aiming to raise revenue by increasing
spending on compulsory consumer spending, instead of doing so on luxury goods
such as alcohol, cigarettes and cosmetics.
A financial specialist Kaaya, said that typically, taxes are not charged twice on the
same product or service as is the case with telephone bills. What he said is that the
government could collect taxes from parliamentary allowances, harvesting of marine
resources and natural resources for marine fisheries and minerals instead of increasing the
burden on the people. Also a financial transaction service agency in Mwanza, Bahati
Kunju said that, “The increase in tariffs would not only affect customers but also youth
employment. He said many consumers’ will turn to banks instead of phones to facilitate
their transactional activities” (Mnganga et al, 2021).
He also added that, “It is easier for someone in Nyegezi who wants to spend shilling
50,000 on someone in the city to board a daladala to send him than to send the money by
phone” (Mnganga et al, 2021). Christopher Gamaina of Mara region said: “The
government should consider its decision to increase tariffs on telephone transactions
because this is the way in which all citizens are involved in financial services” (Mngaga
et al, 2021).
Jamii forums (2021) quoted Meshack who provides his views on“Njia mbadala ya
Tozo ya miamala ya simu” where he argued that, the government should come up with an
ambitious tax collection strategy but this is not what they have introduced to oppress the
poor Tanzania who is dependent on spending money or giving from someone else, what
31
the government could do is that should increase tariffs on imports of mobile phone
traders. By doing so it will be earning a certain amount of money that will help in the
construction of development projects. Also the government will charge shilling only 200
on every cover of mobile phones entering the country, if you take the one million covers
that will be imported by phone means the government will get shilling 200 million, per
month , and lastly the government should charge shilling 100 for every telephone
protector imported from abroad, of which only one million protectors will be imported
per day the government will be guaranteed shilling 100 million and per month will be
guaranteed to earn shilling 3billion. It is high time now the Tanzania Revenue Authority
(TRA) has come up with new tax revenue strategies that if implemented will not hurt the
poor citizen.
Jamii forums (2021) quoted Faiq who provides his views on “Tozo za miamala ya
simu” where he argued that cutting patriotic tax for every citizen is not a bad thing but
the bad comes that the cost is high from the beginning but the people were silent on the
growth that made it so private companies that increase costs every time they feel.
Therefore, the government had to make a realistic decision to reduce costs from these
mobile networks before increasing their taxes which would make it impossible to see
effect after introducing their taxes. If there really is a patriotic tax we need every leader
to be responsible for his salary deductions and any leader who fails to address the
challenges of his people at least 60% to pay compensation lifts his back after ending his
term by consuming free peoples’ money without solving them their problems would also
help our government by ensuring that the goal of holding elections and parties to appoint
leaders in regions, countries and states is achieved 100%.
32
Jamii forums (2021) quoted Faiq who provides his views on “Tozo za miamala ya
simu” argued that the government should reduce taxes on the preference of companies
and local investors this will attract more investment; it will also bring relief to citizens
who are the last consumers. Also he said government should reduce the Value added tax
if possible and remove it completely. He argued also on the issue of leaders that they
must be creative before introducing new levies to the people. They must ensure that the
resources we have are used efficiently and effectively for every citizen without
discrimination and that we must eliminate any place among us, recognizing that any act
of corruption is the enemy of our development.
Malanga (2021) quoted ACT-Wazalendo leader ZittoKabwe who said that
transaction fees were imposed by the government in the government budget for
2021/2022 to facilitate the construction of classrooms in the country. Recently the
government has received funding from the International Monetary Fund (IMF) which has
been announced to be used to build facilities and classrooms across the country. Zitto has
advised the government to reduce or eliminate levies.
Haberler news (2021) on taxing mobile Transactions Draws Ire in Tanzania
speaking to Anadolu Agency an entrepreneur Abdulkarim who argued that the
government has to rethink the decision as he apprehended that it will kill the mobile
phone business in the country. With about 26 million people, roughly half of Tanzania’s
58 million population using mobile phones for transactions, the impact of this tax are
being felt on the ground.
Lilian Masawe, a retired teacher in Dar-es-salaam a major city and commercial
part on Tanzania said that, “My daughter has stopped sending me money through World
33
Remit from Texas in the United States because whenever I go to withdrawal it ends up
paying too much as governmental fees” so she said the government should reduce the
levy ( Haberler news, 2021).
Abel Daud an auto rickshaw driver in Dar-es-salaam said he is now refusing
payment from passengers through mobile money. He said he is telling those passengers
not to carry cash deposit money in his bank account directly instead of transferring it to
his mobile phone. “It’s better to use an Automatic Teller Machine (ATM) since the fee is
too small,” he said Daudi (Haberler news, 2021).
Prosper Ngowi, a professor of Economics at Mzumbe University, said the new tax
regime will harm low-income people in rural areas, where banks are miles away. “High
tax rate on retail electronic transactions levied on low-income earners who are sensitive
to transaction cost may discourage them from using mobile phone based
transactions”(Haberler news, 2021).
University Economist and Lecturer at Mzumbe, Dr. Godbertha Kinyondo,
speaking to Nipashe on the issue of mobile money taxation, and he said the government
should stay at the table with its powers which are the Ministry of Finance and Revenue
Authority(TRA) reviewed the levies.“I see this new deduction system coming up quickly,
I don’t know if the government sat down and did a thorough investigation because it can
affect people especially business people”. Dr. God bertha said the banking system by
telephone was introduced for the sake of all people to help them get into financial sector
by telephone and through the system they can access services for convenience. Also he
said the ways in which people will be used are the people themselves to transfer money
34
and go to the bank, so a new levy will increase traffic jams and end of the day they will
go back economically.
“Citizens will waste a lot of time going to the bank to set up and give money and
stop doing productive or nurturing activities family” he said that (Geofrey&
Mwakangale, 2021)
Ukonga resident in Dar es Salaam, Alfred John, told Nipashe News, that he made
a transaction from the internet cell phone and cut off an amount that is twice that initial
cost.“I gave shilling 1 million they cut me shilling 16,000. It would better have bank
account, I give it to Automatic Teller Machines, the government has decided to kill the
transactions system for setting, sending and giving money through phone companies,
because it is unprofitable for the user of this service, it is a loss,” he complained. Mrisho
said for farmers it is a huge loss for because they often send input money, but money of
crops is used by telephone, hence the new charge will cause loss to them. “For example, a
farmer who sells produce meets auctioneers, still tax cuts on the phone, this is further
detrimental to the poor more and more poor” Mrisho complained.
A small businessman, Sharon Emmanuel, claimed the deductions are huge
compared to the daily income of Tanzanians’. “This tax is too high and I wonder why
they decided to enslave the citizens’ who our own life throws let the sauce go? Why
would they not decide to cut into the allowances and salaries of all Member of Parliament
nationwide? Why would it be enough? “Sharon said.
In Malawi, July 2019, as part of the budget statement for the following fiscal year,
the Government of Malawi proposed introducing a 1% withholding tax on all mobile
money transactions, citing similar policies in other countries as inspiration. The proposal
35
did not extend to banking transactions. Existing consumer taxes on mobile money
services include Value added tax (16.5%) payable on transaction fees and a withholding
tax charged on the interest paid from the trust account (the interest is paid to users of the
service). Agent commissions are also subject to a 20% withholding tax (Clifford, 2020).
Due to this situation the citizens of Malawi started to provoke their views on this tax.
Consumer Association of Malawi (CAMA) argued that the tax would undo
financial inclusion gains seen in the country and discriminate against the poor. The
Malawi Confederation of Chambers of Commerce and Industry (MCCCI) raised concerns
regarding the negative impact the proposal would have on Reserve Bank of Malawi
(RBM’s) cashless agenda. Local academics pointed to the likely adverse effect on the
rural poor. The World Bank pointed out how the policy could hit the country’s financial
inclusion and digitization agendas (Clifford, 2020).
Musowa (2019) on CAMA objects to tax on non-bank mobile money transaction
quoted one among of the citizen in Malawi Said Kapito who argued that, “There is need
for a serious reflection on the tax position that is likely to destroy all the gains which
have already been made by all players in the quest to achieve financial inclusion.
Disproportionately impacts the low-income consumers who are the biggest users of
mobile money. “Will discourage savings (Many low income consumers don’t have bank
accounts they keep money in mobile wallets for future use instead of having hard cash)
and financial inclusion.
A law lecturer at the university of Malawi’s chancellor college commented on
Malawi government introduces 1% tax on mobile money transactions and said, “The tax
36
would disempowering the under-banked and unbanked, and added that it seemed as if the
government had charged or abandoned its primary agenda”.
Malakata (2019) reported Madise who was quoted by the local Nation newspaper
saying “on one hand, mobile money services were touted by the government as a solution
to empower rural people but on the other hand, the system has now decided to plot
against the very people it should empower and will take from them the little that they
have and fill up tax purse”.
Clifford (2020) argued that, the imposition of the 1 % mobile money transaction
tax in Uganda had both an immediate impact and reaction. By August 2018, overall
industry transaction values had dropped 24 %. Person to Person (P2P) values fell by more
than 50 % as users chose to exit the mobile money system, with lower value transactions
migrating to cash and higher values to banking. Due to this situation made people of
Uganda to come up with different views concerning the new imposed tax on mobile
money transactions.
Harriet (2019) did a quantitative and qualitative approaches based on a cross
sectional descriptive survey design through simple random and purposive sampling on a
sample size of 50 respondents on the views of negative effect of mobile money tax to
mobile money agent in Uganda where she found that, mobile money tax affects the
growth of businesses for the agents and the results revealed that 24(58%) of the
respondents strongly agreed on that, 11(27%) of the respondents agreed while 2(5%)
disagreed, 4 (10%) of the respondents strongly disagreed on that.
Lees et al (2021) reported on the public perception of the mobile money tax
through a public opinion survey of nearly 3,000 people conducted in the second week of
37
July in Uganda found that 98% of respondents did not support or were strongly opposed
to the mobile money tax.
Whitehead Communications (2018) conducted the public opinion survey on the
recent social media and mobile money taxes in Uganda through a mixed approach based
on a sample size of 2,315 respondents where he revealed to the respondents when were
asked about the impact of the new Mobile money tax on their business. 2,334 respondents
offered their answers, which fell into the following thematic groups such; Delayed
payments, general inconvenience, increase in the cost of doing business, loss of income,
reverting to banking and cash payments.
Again those conducting business using social media were asked about the impact
that the new tax had on their livelihoods, and 1,640 people offered response on how they
had been affected, revealing the following trends; Delays in conducting business,
disrupted payments, general inconvenience, increase in the cost of doing business, and
loss of income ( Whitehead Communications, 2018).
Whitehead Communications (2018) conducted the public opinion survey on the
recent social media and mobile money taxes in Uganda through a mixed approach based
on a sample size of 2,497 respondents they revealed when asked respondents whether
they support the mobile money tax, nearly (12) 0% of respondents strongly supported the
tax, (26) 1% of respondents somewhat supported, (25) 1% of respondents were undecided
or neutral, (464) 19% of respondents did not support and (1,970) 79% of respondents
strongly opposed.
According to PHB development in Partnership with UNCDF, who provides their
views by argued that taxing mobile commerce especially mobile money, is not only
38
regressive but unhelpful to the economy. Preliminary findings of the study titled: Impact
of mobile money taxation in Uganda, indicate the tax is problematic in many ways,
limiting government and programmers’ such as achieving a cashless economy and
financial inclusion (Ladu, 2021). The study also highlighted that the tax is unfriendly to
people involved in large transactions, noting that this limits growth and hinders
innovations. The study also indicates that the 0.5% on withdrawals is regressive and has a
negative impact on formalization of the economy, which as a result, keeps outs hundreds
of users, especially in agriculture.
Mr. Pall Kvaran, the PHB Development Associate consultant and Ms Laura
Bierer, also a consultant with PHB Development, said the tax could have forced a number
of users to migrate to better alternatives such as agent banking instead of consolidating
gains to achieve better results (Ladu, 2021). However, according to the report a number
of respondents said they have no alternative but to use mobile money notwithstanding the
tax. The study also noted that a number of respondents had said that the 0.5% tax was
unreasonable with at least six out of ten saying it is high, especially in regard to large
transactions (Ladu, 2021)
International monetary Fund (2022) point out, the behavioral changes caused by
mobile money tax which result in unintended tax revenue shortfall in Uganda, and argued
on the impact of mobile money taxes, the report illustrates that “More generally, mobile
money taxes can have a negative impact on excise tax receipts (as consumers are pushed
into non-traceable cash transactions) and on the size of remittances from abroad, which
are facilitated by mobile money”.
39
In Cameroon, going forward mobile money users in Cameroon will have to pay a
money transfer tax of 0.2% of the amount transferred or withdrawn. This is according to
the 2022 finance law of Cameroon recently adopted by parliament and enacted by
President Paul Biya. The law applies to all electronic money transfer transactions but
exempt bank transferred and transfers for the payment of other taxes, duties and levies
(Atabong, 2022).
A resident from Cameroon believes the new tax will slow financial inclusion
whereas Cameroon has plans of becoming a digital economy by 2035 and she said that,
“The new mobile money tax will especially hit the poorest, unbanked segments of
Cameroon society. There is no such tax on wire transfers through banks and it’s paid
twice. Once to send, once to receive and for what? To pay for government excesses and
corruption”.
Ake et al (2022) conducted a study on a legal overview of the money Transfer tax
in Cameroon through a qualitative approach based on reviewing the existing literatures,
journals and articles and found that mobile money is disproportionately used by
marginalized groups in society. Informal businesses, women smallholder farmers,
refugees and young people. Evidence suggests that while those with higher income use
the service too, they also have access to the banking system and can avoid paying mobile
money transactions tax if necessary. People on lower incomes have no such luxury; the
only alternative means open to them is to revert to cash.
IMF (2022) explains in its March on Cameroon: Mobile money tax may be
counterproductive, the IMF estimates, country report focused on Cameroon “Taxing
mobile money can be fiscally inequitable and hinder the current low level of financial
40
inclusion. The poor and unbanked segments of the population, who often live in rural
areas and face high transaction costs from the formal banking, have been found to be
negatively affected by measure”, the report indicate. International monetary Fund point
out, the behavioral changes caused by such tax can result in unintended tax revenue
shortfall.
In Zimbabwe, industrialist of Zimbabwe has complained about the mobile money
tax increase, with the confederation of Zimbabwe industries explaining that, “This tax
will compound through the value chain” with the consequences that there will be a 2%
charge at each value chain stage. “This will prejudice the competitiveness of Zimbabwe
value chains against foreign value chains. We believe that this can be effectively
mitigated by a cap (Monetary value) on the charge (Per transactions)”, said Sifelani
Jabangwe, a president of the Zimbabwe industrialists grouping (Karombo, 2018)
National Consumer Rights Association (Nacora), in Zimbabwe issued a statement
on fiscal review, describing it as unacceptable and punishment on the consumer: “The
hiking of the cost of electricity and the widening of taxes on mobile money transactions
in Zimbabwe, together with a raft of other inflation driving measures, will not only
burden the impoverished consumers but will also drive the costs of doing business, which
cost will be passed on to the consumers” (Zvinoira, 2019)
The Consumer Council of Zimbabwe (CCZ) weighed in and said the Minister’s
actions will hit consumers hard and devaluing local currency continues to erode monthly
merger salaries purchasing power. The chairperson of consumer council of Zimbabwe
Philip Bvumbe said, “A lot of people will not be able to afford those tariff increases,
41
which means the standard of living and welfare for consumers are being compromised
almost on a daily basis” (Karombo, 2019).
Nyamuranza (2011) conducted a study on taxation effect on digital services in
Rwanda. He found out that, most taxation services in Rwanda when reduced bring about
positive changes towards the development of the industries and other technological
factor. He used a descriptive design to sample 80 respondents. He concluded by saying
that taxation have got great role in influencing the technological changes in the world.
According to Syson (2018) conducted a study on the level of taxation and access
of development opportunities in United States of America. He used a stratified sampling
technique and found out that timely transfer taxation affects the opportunities of
development of even small amounts of money can arrest serious declines otherwise hard
to reverse more efficient investment decisions can be made, improving the risk and return
trade off. Mature mobile money systems allowing access to micro-insurance provide an
additional buffer.
The treasury associate at AZA finance, a provider of Foreign exchange treasury
services in Africa, said her company has advised Ghana and Tanzania to avoid taxing
mobile money transactions, “These governments should avoid levies being charged on
smaller money transfers and this would help to ensure that the mobile money operators
do not simply pass the tax burden” (Karombo, 2022)
In Ghana, Ayertey has been a mobile money vendor for 11 years and it’s her only
source of live hood. She said that, Ghana’s proposed government “e-tax” could threaten
telecommunications business like hers. And many worry that the cost prohibitive measure
would impact the millions who depend on mobile money transfers on a daily basis.
42
Ayertey said that if the tax gets implemented, some of her customers are threatening to go
back to the cash system. “It will not help us because they (customers) are complaining
that if they bring that (mobile tax), they will not do mobile money again,” she said
(Osman, 2022)
Customer Andreas Akakpo in Ghana also raised concerns about government
spending. “When you collect the tax and you don’t make good use of it, I don’t see why
the tax should be collected. Go to the (countryside) people are suffering”. Also The
National Democratic congress contends that it would disproportionately affect lower
income people and those outside the formal banking system who rely on mobile money
transfers (Osman, 2022)
Akinwotu (2022) in Ghana reported one among the women at her shop in Accra’s
sprawling Kantamanto market one of the largest for second-hand clothes in West Africa.
Cynthia Bentum sits on top of a mound of goods imported from Guangzhou and
Manchester. Many who traced through her clothes are traders themselves and pay via
their mobile phones, so the decision by Ghana’s government to tax all electronic
payments has left Bentum frustrated and said that, “The main mode of payment is
Momo”, she says, referring to the mobile money services by Mobile transaction network,
the largest provider in the country. “Why board vehicles to come and pay when mobile
money payment makes it easier? He also added that, “I am not against taxes but I think
this particular tax is unnecessary. First of all, look at the cost involved in importing goods
into the country. The freight charges are outrageous. Now they want us to pay an e-levy
for what? This is going to affect me seriously and I may end up losing customers, which
will eventually affect my business”.
43
Kofi Brobbey sells spare parts from his store nearby. After being robbed he began using
mobile money more often, especially to buy fuel. “I don’t want pay with MoMo anymore
because I’m going to be taxed on top of the price for the fuel. Does this make sense at
all? Where is the digitalization they promised us? We have been deceived, and now the
reality is dawning on us”.
Adepoju (2018) explore on Ivory Coast imposes new tax on mobile money
transfers and one among of the director for Africa, Brian Muthiora, said that, “The brunt
of the new tax regimes would severely affect users already below the poverty line. Rather
than introduce new taxes, the organization argued African regulators to focus on
expanding Revenue mobilization and support the growth of mobile money across the
continent.
Musuku, Fuchs and Symington (2017) did a study on mobile money taxes in
Pakistan and Tanzania through stakeholder interviews and focus –group discussion with
customers and agents. The authors find that taxes were unlikely to have influenced
demand for person-to-person (P2P) transfers, as the total tax burden was small (1-2% of
the amount transferred) compared to other transactions costs and there are few outside
options. However, they also argue that taxes might discourage the broad adoption of
more advanced uses of mobile money, such as merchant payments and mobile credit.
2.4 Research Gap
From the review of empirical studies such as Clifford (2020), studied on the
causes and consequences of mobile money taxation, examination of mobile money
transaction taxes in sub-Saharan Africa such as Malawi, Uganda, and Congo and so on. It
has been found that studies have been conducted but there is information gap on
44
empirical studies, for example, Ndung’u (2019) conducted a study titled “Taxing mobile
phone transactions in Kenya”. Another study was conducted by Solomon and Magumba
(2015); titled “Taxation of the Telecommunications sector: A focus on policy issues and
consideration in Taxation of mobile money in Uganda”. So all these previous studies are
about the impacts of mobile money tax in sub Saharan Africa but did not talk about
peoples’ perceptions of mobile money taxation in sub Saharan Africa –Tanzania.
Therefore, from this point of view, the researcher decided to conduct a study based on
assessing peoples’ perceptions on the imposition of new value added tax (Tozo) in
networking transactions in Nyamagana District in order to fill this gap of knowledge.
45
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Introduction
This chapter present an overview of procedures and methods that applied by a
researcher in order to answer the questions of the current study. Each procedure and
methodology was under a brief description and justification. They included Research
approach, Research design, Area of the study, population, sample and sampling
technique, Data collection instrument, Data analysis strategies and Ethical consideration.
3.2 Research Approach
The researcher used quantitative approach. Quantitative research approach is one
among of three common approaches namely: Qualitative, mixed as well as quantitative
research approach. The researcher selects one of the three research aforementioned
approaches to conduct research (Creswell, 2003). Researcher typically select the
quantitative approach, as an approach that dealing with numbers and anything that is
measurable in a systematic way of investigation of phenomenon and their relationships, it
is used to answer questions on relationship with measurable variable with an intention to
explain, predict and control a phenomenon (Leedy, 1993).
Quantitative approach allows numeric presentations of data especially through
descriptive statistics and also creates reasonable associations with researcher’s needs of
collecting numerous data at a single point in time. Quantitative research approach has its
various features such as: it allows the study of population in a large area, it collects data
in a widely within a single large area as well as the data can be presented in statistical
46
way. The reason to use this approach and not other approach is that, this approach allow
getting accurate measurement, also it allows collection of numerical data and the
presentation done by diagrams, tables and charts.
3.3 Research Design
The researcher used cross-sectional design. Cross-sectional research design is one
among of the three types of research design such as: Longitudinal study design, case
control as well as cross-sectional design. The researcher selects cross-sectional design, as
a type of research design that allows a researcher to collect data from many different
individuals at a single point in time (Thomas, 2020). Cross-sectional design comprises
different features such as: The design takes place at a single point in time; it can provide
information about what is happening in a current population. This design is very
important to be used because it is cheaper and less time consuming that allowed a
researcher easily to collect great deal of information quickly that can be used as a basis
for further research. Also a researcher was able to amass large amount of information
from a large pool of participants.
3.4 Area of the Study
A study was conducted at Mkolani ward, which is located in Nyamagana District
in Mwanza Region. Nyamagana district is one of the seven districts in Mwanza Region. It
is bordered to the North by Ilemela District, to the East by Magu District, to the south by
Misungwi District and to the West by the Mwanza bay of Lake Victoria. Nyamagana is
found between Latitude 2.5253o south and longitude 32.890225o east. The area of
Nyamagana district has a massiveness of 425km2(164.09 sqmi).
47
Nyamagana district consists of 1 division which is Nyamagana, 18 wards which
were: Mkuyuni, Igogo, Luchelele, Pamba, Mirongo, Isamilo, Mbugani, Mahina, Igoma,
Buhongwa, Mkolani, Luchelele, Nyegezi, Mandu, Kishiri,Nyamagana, Lwahima, and
Butimba.Also there are streets in Nyamagana district which were: Nyamalango, Sweya,
Nganza, Kijiweni, Kuzenza, Mbege, Voil, Masunu, Kayanda, kazimoto, password,
Ushirika, Califonia, Mazura, Sabato, Nkamba, Podo and so far. According to the 2012
Tanzania population census, Nyamagana District have a total population of about
363,452 (Population and housing census, 2012) whereby Female are 185,640 and Males
are 177,812, but due to long period of time there is possibility of the increase of
population.
The dominant ethnic group in Nyamagana district was Sukuma where by the
person traits of Sukuma tribe were kindness, respectfully people, hard workers and other
tribes like Kerewe, Haya, Jita, and Chagga who came for different activities. The
dominant language which unites them was Swahili. People from Nyamagana district
performed economic activities like fishing, Agriculture, pastoralist, and industry. In
Nyamagana district there were a lot of opportunities like Highway roads, beach,
hospitals, and football stadium. Also in Nyamagana district there were a lot of problems
like unemployed people, street children, early marriages as well as the problem of high
burden of mobile money transactions taxation and this is a problem which a researcher
was going to conduct. Many people in Nyamagana district were experienced this problem
despite the tariffs has reduced somehow but still it was the thorn to both parties a sender
and a receiver. A researcher chooses to conduct this study in Nyamagana district because
of the interest of the researcher.
48
3.5 Population, Sample, and Sampling Technique
3.5.1 Target population
The targeted population of this study was the people founded at Mkolani ward in
Nyamagana district who were above 18 years old and who were using mobile phone in
mobile money transactions.
3.5.2 Sample Size
The researcher targeted the population of Mkolani ward who were above 18 years
since the total population of Mkolani citizens who above 18 years was 300 then the
sample size obtained by using the formula from a given population. Therefore, the
sample size was:
In that case: N=300, e=5%, n=?
300
From the formula; n=
(1+300∗0.05)2
300
n=
(1+300)(0.0025)
n=1+300×0.0025
300
1+ 0.75
300
1.75
n=171
Therefore, the sample size of this study was 171 respondents. But the researcher used
50respondents as the sample size because of the limited time.
49
3.5.3 Sampling Technique
The researcher used simple random sampling technique which founded among the
four types of probability sampling technique which were: Simple randomly sampling,
systematic sampling, stratified sampling and cluster sampling. The researcher selected
simple randomly sampling technique, a technique which is a subset of a statistical
population in which each member of the subset has an equal probability of being chosen
(Hayes, 2021). This technique was the most straightforward of all the probability
sampling methods, since it only involves a single random selection and requires little
advance knowledge about the population.
This technique was important to be used by the researcher simply because this
technique involves every element in the population to have equal chance of being
selected. Also this technique gives a representative sample, where it presents a group of
total population as well as its result obtained can be generalized. Therefore, the
researcher used simple random sampling technique to obtain respondents such that , to
implement simple random sampling; the researcher prepared a sample frame by listing all
people above 18 years old of Mkolani ward who used mobile phone in mobile
transaction. After having the list, a researcher prepared a coupon and writes names and
put into a container, and then a researcher mixed thoroughly the units in the container and
pick while recording at a time.
3.6 Data Collection Method
The researcher used Survey method of data collection as a research method used
for collecting data from a predefined group of respondents to gain information and
insights into various topics of interest (Thomas, 2020). Survey method provides a
50
quantitative or numeric description of trends, attitudes or opinions of a population. It
includes cross-sectional and longitudinal studies using questionnaire or structured
interviews for data collection, with the intent generalizing from a sample to a population.
This method was very important because it lists a set of structured questions to which
respondents provide answers based on their knowledge and experience. A researcher
chooses this method because survey method based on design of cross-sectional study
which analyzes data of variable collected at one given point of time across a sample
population. Also survey method allow to gather data from a large sample size, the cost of
creating and administering a survey was usually lower compared to other research
methods that is why a researcher choose this method so that to obtain the data easily.
3.6.1 Questionnaire
The researcher used questionnaire as a research tool consisting of a series of
questions and other prompts, although they are often designed for statistical analysis of
the responses (Gault, 1907). A questionnaire is typically a mix of open-ended questions
and closed-ended questions. Questionnaire method is easy compared to other methods; it
is bias-free, less costly and does not exert a great deal of pressure on the respondent,
making them more comfortable. The researcher used structured questionnaire to collect
data as a document that consists of a set of standardized questions with a fixed scheme,
which specifies the exact wording and order of the questions, for gathering information
from respondents. The researcher used closed-ended questionnaire that contained
questions and answers developed from specific objectives such as: Factors influenced the
imposition of new value added tax (Tozo) in Networking transactions, Citizens
networking transactions after the imposition of new value added tax (Tozo) in networking
51
transactions as well as Perceptions of peoples’ on the imposition of new value added tax
in networking transactions. Each specific objective considered its own questions. And
this questionnaire was administered by the interviewer.
3.7 Data Analysis Strategies
The researcher analyzed the data collection by the help of software program
which is statistical package of social science (SPSS). Data from questionnaires was
analyzed quantitatively using descriptive statistics provided by SPSS. The SPSS package
was preferred due its extensive analytical capacity and ease administration of data. The
analyzed data was presented by using diagrams like charts, frequency, as well as graphs.
3.8 Ethical Consideration
According to Gall et al (2017), ethical is a principle or moral guiding a researcher
protecting research participants from possible harm. The researcher considered the ethical
requirements that were needed to consider just before starting data collection, during data
collection and during report writing.
Before starting data collection, a researcher considered the permission letter from
her institution and the place where she was going to collect data that enabled her to get
the required information easily without being doubtable by the research respondents.
During data collection the researcher considered the following things: Informed
consent, avoid exploitation, honesty, anonymity. Informed consent, a researcher ensured
all participants were informed about the purpose of the research study, and only those
giving their informed consent participated in the study where by its intent was that human
participant can enter in a research freely (voluntary) with full of information about what it
52
means for them to take part, and that they gave consent before they enter the research. A
researcher asked permission to respondents before conducting anything; a researcher
gave detailed information on research that was going to be conducted.
Confidentiality, the researcher ensured confidentiality about the information
provided by the respondents during data collection in the field. Therefore, even before
give out information the researcher assured that the information that they provide was
confident and privacy and thus only for research purposes.
Anonymity, the researcher assured the ethics of anonymity was there, whereby
the researcher ensured that there is no way for anyone (including the researcher) to
personally identify participants especially exposes names of respondents.
Honesty, a researcher assured the quality of being Faithfull and trust. A
researcher presented only the things she found from the study area and not adds anything.
During report writing the researcher considered the following things:
Transparency, plagiarism, and fraud. Transparency, a researcher assured to publish all
the information which she obtains from the study area so that the community to obtain
the information about the things a researcher conducted.
Plagiarism, a researcher ensured not taking words or some ideas of others so
what a researcher considered is that, was to avoid copying the ideas of other researchers.
Fraud, a researcher avoided to provide false information intentionally what a researcher
did is that, she checked that or cross-check the data before printing.
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CHAPTER FOUR
RESEARCH DATA FINDINGS
4.1 Introduction
This chapter presents the findings of the data obtained from the area of the study
through structured questionnaire. The main objective was to assess peoples’ perceptions
on the imposition of new value added tax (Tozo) in networking transactions at Mkolani
ward in Nyamagana District. Statistical package of social science (SPSS) was used to
analyze data. The findings were presented by using diagrams like charts, frequency, as
well as graphs in different sections. Section one present the general demographic
characteristics of the respondents and the other section represent the information based on
specific objectives such as: To find out factors influenced the imposition of new value
added Tax (Tozo) in networking Transactions, to study the citizens networking
transactions and the last to find out peoples’ perceptions on the imposition of new value
added tax in networking Transactions.
4.2 Research Findings
4.2.1 Demographic information of the Respondents
The researcher collected data from 50 participants of Mkolani ward of different
characteristics including Age, Gender, Marital status, occupation and education. The
following table below presents some of their characteristics.
54
Table 4.1.Demographic information of respondents
Age Frequency Percent Valid percent

18-30 18 36.0 36.0
31-40 19 38.0 38.0
41-50 8 16.0 16.0
51 and above 5 10.0 10.0
Total 50 100.0 100.0
Gender
Male 26 52.0 52.0
Female 24 48.0 48.0
Total 50 100 100
Marital status
Single 19 38.0 38.0
Married 30 60.0 60.0
Widow 1 2.0 2.0
Total 50 100 100
Occupation
Doctor 2 4.0 4.0
Teacher 4 8.0 8.0
Entrepreneur 28 56.0 56.0
Engineer 1 2.0 2.0
Driver 8 16.0 16.0
Other, specify 7 14.0 14.0
Total 50 100.0 100.0
Education
Never attained formal 1 2.0 2.0
education
Primary 13 26.0 26.0

Secondary 15 30.0 30.0
High school 3 6.0 6.0
University 18 36.0 36.0
Total 50 100.0 100.0
Source: Research findings, 2022
Table 4.1 above shows the different demographic information of participants whereby the
findings indicated that majority of respondents (52.0%), male followed by 48.0% female. Also,
the findings revealed that majority of respondents (38.0%), aged between 31-40 years followed
by 36.0% aged between 18-30 years of which only 10% participants were aged 51 and above.
Also the findings shown 60.0% of respondents were married, 38.0% single while minority of the
respondents 2.0% was widow.
55
Moreover, the findings revealed that, 56.0% of respondents were entrepreneurs 16.0%, of
respondents were drivers while minority of the respondents 4.0% were doctors. Also in term of
education level, majority of respondents (36.0), had attained university followed by 30.0% of
respondents had attained secondary, 26.0% of respondent’s attained primary while minority of
the respondents 2.0% had never attained formal education.
transactions
In this part the researcher intended to know the factors influenced the imposition
of new value added tax (Tozo) in networking transactions. The respondents were asked
the factors; the table below presents their answers.
Table 4.2 Factors influenced the imposition of new value added tax (Tozo) in
Networking transactions.
FACTORS Disagree Neither Agree nor Agree Total
Disagree (N=100%)
Decline in economy (17) 34.0% (4) 8.0% (29) 58.0% (50)100%
Tax policy weakness (7) 14.6% (4) 8.3% (37) 77.1% (48)100%
To construct class rooms (27) 60.0% (14) 31.1% (4) 8.8% (45) 100%
To fund other projects (12) 28.6% (1) 2.4% (29) 69.0% (42) 84%
To raise government (11) 22.4% (8) 16.3% (30) 61.2% (49) 98%
revenue
Source: Research findings, 2022
Table 4.2 above shows the factors influenced the imposition of new value added tax (Tozo) in
networking transactions. The findings indicated that majority of respondents (77.1%), agreed on
the tax policy weakness, 14.6% disagreed while minority of the respondents 8.3% of respondents
were neither agreed nor disagreed.
On the other hand, the finding shows that 69.0% of respondents agreed on the funding of other
project, 28.6% disagreed while minority of the respondents 2.4% were neither agreed nor
disagreed. The study also revealed that 61.2% of respondents agreed on the raised of government
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revenue, 22.4% disagreed while minority of the respondents 16.3% neither agreed nor disagreed.
Moreover, 58.0% agreed on the decline of economy, 34.0% disagreed while minority of the
respondents 8.0% were neither agreed nor disagreed on that.
(Tozo) in networking Transactions
The researcher wanted to study citizens networking transactions after the
imposition of new value added tax (Tozo) in networking Transactions. Sections that
follow represent the findings.
4.2.3.1 The extent of the imposition of new mobile money taxation changes mobile
money transactions
Under this part the respondents were asked to respond to what extent does the
imposition of new mobile money taxation change their mobile money transactions. The
table below shows their views in relation to their occupation.
Table 4.3: Changes of mobile money transaction and occupation

Occupation
Entrepren Other,
Doctor Teacher eur Engineer Driver specify Total
Changes of mobile High extent Count 0 4 15 0 5 6 30

money transaction % of Total 0.0% 8.0% 30.0% 0.0% 10.0% 12.0% 60.0%
Moderate Count 2 0 11 1 2 0 16
% of Total 4.0% 0.0% 22.0% 2.0% 4.0% 0.0% 32.0%
Low extent Count 0 0 2 0 1 1 4
% of Total 0.0% 0.0% 4.0% 0.0% 2.0% 2.0% 8.0%

Total Count 2 4 28 1 8 7 50
% of Total 4.0% 8.0% 56.0% 2.0% 16.0% 14.0% 100.0%

Source: Research Findings, 2022
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Table 4.3 above shows changes of mobile money transactions after the imposition of new tax
(Tozo) in networking transactions in relation to their occupation. The findings indicate that
Majority of all participant (60.0%), their mobile money transaction behavior changed at high
extent such that, a half of them 30.0% were entrepreneurs while doctor and teacher were not
followed by 32.0% of all participants said their mobile money transactions behavior changed at a
moderate rate, whereby 22.0% of them were entrepreneurs while teacher and others were not
respond respectively.
4.2.3.2 Frequency of transferring money via mobile network and via bank in order
to minimize cost
Under this part the respondents were asked to respond how often they transfer
money via mobile network and via bank in order to minimize cost. The table below
presents their answers.
Table 4.4: Frequency of transferring money via mobile network and via
bank in Order to minimize cost.
Transferring money via mobile Frequency Percent Valid Percent
network
Valid Very often 4 8.0 8.0
Often 21 42.0 42.0
Rarely 24 48.0 48.0
Never 1 2.0 2.0
Total 50 100.0 100.0
Transferring money via bank
Valid Very often 10 20.0 20.0
Often 10 20.0 20.0
Rarely 22 44.0 44.0
Never 8 16.0 16.0
Total 50 100.0 100.0
Table 4.4 above shows how often citizens transfer money via mobile network and bank in order
to minimize cost. The findings indicate that majority of the respondents (48.0%), rarely transfer
money via mobile network in order to minimize cost followed by 42.0% of respondents who
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often transfer money via mobile network, while minority of the respondents 2.0% never transfer
money via mobile network in order to minimize cost. On the other hand, 44.0% of all participants
rarely transfer money via bank and 20.0% of the respondents transfer money via bank very often,
while 16.0% of participants never transfer money via bank.
Under this part the respondents were asked to respond to the following
alternatives which they have used to send money to other persons in order to minimize
cost. The table below presents their answers.
Table 4.5: Alternatives of sending money to other persons in order to
Minimize cost.
Alternatives of sending money Frequency Percent of
Cases(N=38)
Send the money personally (on foot) 28 73.7%
Send money personally (by Car or bike) 12 31.6%
Table 4.5 above shows alternatives ways used by the citizens to send money to the other persons
in order to minimize cost. Of all participants 76.0% agreed that they used alternatives ways of
sending money to other persons in order to minimize cost, such that 73.7% of them used the
alternative of sending the money personally (on foot) while 31.6% was for all participants who
used to send money personally (by car or bike).
networking transactions
The researcher wanted to find out Peoples’ perceptions on the imposition of new
value added tax (Tozo) in networking transactions. The table below shows their views in
relation to their Education.
59
transactions
Under this part the respondents were asked whether they think that is it a good
thing to introduce a new value added tax (Tozo) in networking transactions in relation to
their education. The table below presents their views.
Table 4.6: A good thing to introduce mobile money transaction

Taxation and Education
Education
Never attained
formal High
education Primary Secondary school University Total
A good thing Yes Count 0 2 1 1 2 6
to introduce % of Total 0.0% 4.0% 2.0% 2.0% 4.0% 12.0%
mobile money No Count 1 11 14 2 16 44
transaction
taxation % of Total 2.0% 22.0% 28.0% 4.0% 32.0% 88.0%
Total Count 1 13 15 3 18 50
% of Total 2.0% 26.0% 30.0% 6.0% 36.0% 100.0%
Table 4.6 above shows whether it is a good thing to introduce new value added tax (Tozo) in
networking transaction in relation to the education of respondents .The above findings revealed
that 88.0% of all participants disagreed that it is not a good thing to introduce mobile money
taxation but majority of all participants (32.0%), who disagreed had attained university level of
education, followed by 28.0% of respondents had attained secondary and 22.0% of respondents
had primary level of education.
4.2.3.2 Advantages of the new value added tax (Tozo) in networking transactions
In this part the researcher intended to know the advantages of value added tax
(Tozo) in networking transactions. The respondents were asked about the advantages of
Value added tax (Tozo). The table below presents their views.
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Table 4.7: Advantages of value added tax (Tozo) in networking
Transactions.
Advantages of new VAT Frequency Percent Cases (N=6)
It leads to development of 4 66.7%
infrastructure
It leads to development of 6 100.0%
economic sectors
It leads to the increase 3 50.0%
government revenue
Total 13 216.7%
Table 4.7 above shows the advantages of new value added tax (Tozo) in networking transactions.
12.0% of all participants agreed on the advantages of value added tax (Tozo) in networking
transactions, such that 100.0% of respondents said it leads to development of economic sectors
followed by 66.7% of respondents said it leads to development of infrastructure while 50.0% of
them said it leads to the increase of government revenue.
Under this part the researcher wanted to know the disadvantages of new value
added tax (Tozo) in networking transaction. The respondents were asked the
disadvantages of new value added tax in networking transactions. The table below
presents their views.
Table 4.8: Disadvantages of value added tax (Tozo) in networking

Transactions.
Disadvantages of new VAT Frequency Percent Cases(N=44)
Money circulation declines 37 84.1%
Inflation of goods and 22 50.0%
services
Deterioration of online 25 56.8%
business
Undermines investment 5 11.4%
It leads to unemployment 29 65.9%
Total 118 268.2%
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Table 4.8 above shows the disadvantages of value added tax (Tozo) in networking transactions.
About 88.0% of all participants agreed on that such that 84.1% of them said money circulation
declines followed by 65.9% of respondents said it leads to unemployment, while minority of
11.4% of respondents said it undermines investment.
4.2.3.4 Elimination of new tax (Tozo) on mobile money transactions
The researcher intended to know the views of citizens of Mkolani ward about the
removal of new tax (Tozo) on mobile money transactions. The respondents were asked
whether the new tax on mobile money transactions could be removed or not. The figure
below presents their views.
Figure 4.1: The levels of agreement on the removal of new

mobileMoney transactions tax
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Figure 4.1 above shows the level of agreement on the removal of new mobile money transactions.
The respondents were asked whether the new tax (Tozo) on mobile money transactions should be
eliminated. The findings reveal that majority of the respondents (66.0%), strongly agreed that the
mobile money transactions taxation should be removed followed by 18.0% of respondents agreed
to remove the mobile money transactions taxation while minority 6.0% of respondents disagreed
to remove the new mobile money transactions taxation.
4.2.3.5 The best source to increase revenue.
Under this part the respondents were asked to choose among the sources of
government revenue which is the best to use so that to increase government revenue
rather than depend on poor Tanzania. The figure below presents their answers.
Figure 4.2: The best source to increase revenue.

63
Figure 4.2 above shows the best source of revenue to be used so that to increase government
revenue rather than depend on poor Tanzania. The respondents were asked to respond to the best
source of revenue to be used so that to increase government revenue. The findings reveal that
majority of the respondents (38.0%), agreed that parliamentary allowances was the best source of
revenue to be used followed by 36.0% of respondents said harvesting of marine resources and
natural resources was the best source while minority of the respondents 4.0% said to increase
tariffs on imports of mobile phones trades was the best one to be used so that to increase
government revenue.
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CHAPTER FIVE
DISCUSSION OF FINDINGS
5.1 Introduction
This chapter presents the discussion of the findings presented in the previous
chapter (chapter four).The discussion was based on the specific objectives which were;
To find out factors influenced the imposition of new value added tax (Tozo) in
networking transactions, to study citizens networking transactions after the imposition of
new value added tax (Tozo) in networking transactions and to find out peoples’
perceptions on the imposition of new value added tax (Tozo) in networking transactions.
The researcher related the findings of this with the previous studies or scholarly literature
reviewed in the second chapter. The discussion of the findings helps the researcher to
determine the area of similarities and differences with other scholars in order to provide
implications of the findings.
5.2 Discussion
Generally, the study aimed at assessing the perceptions of peoples’ on the
imposition of new value added tax(Tozo) in networking transactions at Mkolani ward in
Nyamagana district. The findings showed various factors which led to the imposition of
new value added tax (Tozo) in networking transactions that was stated by majority of the
respondents such as Tax policy weakness, Decline in economy. Due to these factors it
leads to the implementation of mobile money tax.
Also, due to these factors resulted to the citizens networking transactions to
become changed after the imposition of new value added tax (Tozo) in networking
transactions but in relation to the occupation of respondents. The findings revealed that,
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majority of the respondents their mobile money transactions changed at high extent
whereby the most affected one were entrepreneurs, whom rarely transferring money via
bank and mobile network in order to minimize cost. Due to this situation majority of the
people found other alternatives of sending money to other persons in order to minimize
cost like to send money personally (on foot) while others used to send money personally
(by car or bike). Also, there were peoples’ perceptions on the imposition of new value
added tax (Tozo) in networking transactions that based on viewing on the removal of
mobile money tax, the findings revealed that majority of the people need the tax to be
eliminated because it leads to the occurrence of various effects such as; money
circulation declines, it leads to unemployment, Deterioration of online business as well as
inflation of goods and services. Also in the best source to increase revenue majority of
the people provide their views by showing the best sources of revenue to be used by the
government so that to increase revenue such as; parliamentary allowances, harvesting of
marine resources and natural resources, increase tariffs on imports of mobile phone
traders, Administrative revenue and public debt.
Also there are previous studies done by different researchers such that, Clifford
(2020), who showed different factors for the imposition of new value added tax (Tozo) in
networking transactions such that: Tax policy weakness, administrative weakness, and
political economy, which leads to the citizens networking transactions to change and this
was supported by the study conducted by Whitehead communications (2018) who
revealed 93% of respondents reported that they used Mobile money in the last months
when asked how their mobile money use changed since the implementation of the new
tax in mobile money transactions. Despite there was deductions of the tax but still people
66
provide their views concerning the new tax whereby the study conducted by Whitehead
communications (2018) shows majority of the people 79% opposed concerning the
mobile money taxation.
transactions
The researcher aimed to find out factors influenced the imposition of new value
added tax (Tozo) in networking transactions. The study revealed that there were various
factors that influenced the imposition of new value added tax (Tozo) in networking
transactions. These include decline in economy, Tax policy weakness, to construct
classrooms, to fund other projects as well as to raise government revenue. Majority of
respondents (77.1%), agreed that tax policy weakness is the major factor followed by
69.0% said to fund other projects, 61.2% said to raise government revenue while 58.0%
said decline in economy led to the imposition of mobile money taxation. This can be
shown in table 4.2; it means that the factors that influenced the imposition of new mobile
money transactions were Tax policy weakness, funding of other projects, to raise
government revenue and decline in economy because it was stated by the majority of
respondents.
The findings relate with the study done by Clifford (2020) who examines different
motivations behind the imposition of mobile money taxation that were conducted in
Uganda, Democratic Republic of Congo, Cote d’Ivoire and Malawi. It was revealed the
different driving force for the imposition of mobile money taxation was largely driven by
Tax policy weakness, Administrative weakness, and political economy factor.
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Likewise, according to the study led by Sippy in Tanzania (2021) on Tanzania’s
new mobile money tax is a blow to the booming sector revealed that, mobile money has
since the backbone of a broad range of public services, including health, education, and
social protection. However, with the COVID-19 pandemic hitting Tanzania’s economy
hard, the government introduced the new tax (Tozo) in an effort to raise its revenue
collection to finance the 2021/2022 national budget. Due to this imposition the proposal
was expected to increase government revenue by shilling 1,254,406.14 million.
The study conducted by Rene et al(2022) in Cameroon show the motivating
reason for the advancement of taxes are common across developing countries such as;
structural weakness at policy level, lack of capacity within research units and also lack of
national policy frame works.
Also, the previous study done by Alfred in Tanzania (2021) on the smooth
charges and financial transactions Deloitte Tanzania’s Digital meaning revealed that the
economic situation of Tanzania was severely affected by the COVID-19 crisis, where
Tanzanians economic growth was reported to have dropped to 4.8% from 7.0% with
sectors such as tourism losing their revenue of 70%. In a bid to fund new sources of
revenue, the government led by President Samia Suluhu Hassan proposed a tariff of
mobile money transactions depending on the ability to increase the balance.
Also, these findings relate with socio-political theory that revealed the social and
political objectives must be the major factors in designing a tax system so that to serve
individuals as well as to cure the ills of society as whole. Whereby the theory including
other social and economic objectives of the society in which taxation could be a useful
68
tool. These include curbing down cyclical fluctuations, unemployment, production of
undesirable goods and services, monopolistic and restrictive trade policies.
Therefore, the researcher here suggest that in order to be expelled out from this
factors which influenced the imposition of new value added tax(Tozo) in networking
transactions simply because Tax policy weakness has seemed to be the major one to
impose this new mobile money tax so government itself must ensure the tax policy
become reviewed well and try to ensure no one is stronger than other on providing their
views on the issue of implementing any kind of tax so everyone should be listened
without regarding the position which he or she has so that at the end to come up with the
good things which at later might not hinder both side.
(Tozo) in networking transactions.
In this specific objective the research findings revealed the citizens networking
transactions in relation to the occupation of respondents. The following parts show the
findings of the study.
5.2.2.1The extent of the imposition of new mobile money taxation changes mobile
money transactions
In order to understand citizens networking transactions after the imposition of
new mobile money tax respondents were asked to what extent does the imposition of new
mobile money tax changes their mobile money transactions in relation to their
occupation. The changes were at high extent, moderate and low extent. Whereby 60.0%
69
of all respondents agreed that their mobile money transactions behavior changed such
that, half of them 30.0% entrepreneurs while doctor and teacher did not respond
respectively followed by 32.0% of all participants agreed that their mobile money
transactions changed at moderate rate whereby 22.0% of them entrepreneurs while
teacher and others did not respond respectively, 8.0% of all participants agreed that their
mobile money transactions changed at low extent whereby 4.0% of them entrepreneurs
followed by drivers and others agreed respectively while 0.0% of doctor and teacher
never respond the question. This can be shown in table 4.3; it means that the major
changes occur to the entrepreneurs whom their mobile money transactions changed at
high extent, moderate extent as well as at low extent rate.
These results are supported by the study conducted by UNCDF (2021) which
reported on the interview made by respondents when asked if the introduction of the
0.5% tax in Uganda on withdrawals changed how much they use mobile money, 38% of
respondents claimed that they use it less, 44% of respondents used less while 17.8% of
respondents used more. Also low-income users were unduly affected by the withdrawal
tax, compared with higher income groups.
Also the current study are in the line with the findings of Whitehead
Communications (2018) in Uganda which revealed that 93% of respondents reported that
they used Mobile money in the last months when asked how their mobile money use
changed since the implementation of the new tax in mobile money transactions.
Again the study conducted by GSMA(2021) on Tanzania Mobile Money Levy
Impact argued that, as mobile money transactions became more expensive on account of
70
the new levy, mobile money users rapidly reduced their usage of mobile money in favor
of alternative payment methods such as cash. This is reflected by the sharp decrease in
the total number of person to person (P2P) transactions (-38%). The change in consumer
behavior leads to increased use of cash, reversing gains Tanzania had made in going
cashless. Transitioning to cashless increases convenience and efficiency in the economy
and reduces the cost of cash for the Government. Between June and September 2021, the
total number of person to person (P2P) transactions reduced drastically from 30 to 18
million (-38%) per month, while the total number cash-out transactions reduced from 33
to 25 million (-25%) per month. (GSMA, 2021).
This implies that there many people of different occupation whose their mobile
money transactions changed after the imposition of new mobile money tax and the most
affected one were entrepreneurs it seems that majority of the respondents rely on the use
of mobile money because of the type of work they performed which made them to invest
in different things and the use of mobile money transactions was the only way to ensure
their business run smoothly but unfortunately due to new mobile money tax it shown that
their mobile money changes at high extent. This finding relates with the previous study
because even the previous study done by different scholars it has been revealed that
majority of the people reduced their usage of mobile money in favor of alternative
payment methods such as cash.
5.2.2.2 Frequency of transferring money via mobile network and via bank in order
to minimize cost
The findings realized that the frequency of transferring money via mobile network
and via bank in order to minimize cost were at very often, often, rarely and never. It was
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indicated that majority of the respondents (48.0%), rarely transfer money via mobile
network in order to minimize cost followed by 42.0% of respondents who often transfer
money via mobile network, while minority of the respondents 2.0% never transfer money
via mobile network in order to minimize cost. On the other hand, 44.0% of all
participants rarely transfer money via bank and 20.0% of the respondents transfer money
via bank very often, while 16.0% of participants never transfer money via bank. These
were indicated in table 4.4; where by majority of respondents seem to transfer money
rarely via mobile network in order to minimize cost.
A study reported by Oni (2022) on the survey conducted by UNCDF who
revealed that, about 57.4% of high-income respondents started using agent banking as a
direct result of the tax compared to 11.1% of low income respondents who could not
better access alternatives where similar tax is not applied. Overall, there was a drastic
decrease in transaction value after the tax was introduced of over 50% where higher
income users more likely to engage higher-value transactions migrated away from mobile
money.
Also the study supported by Whitehead Communications (2018) which revealed
that since the implementation of tax (90) 4% reported that they were transacting more
money in July, (58) 2% were transacting about the same as before, (1,027) 44% were
transacting less money in July and (1,101) 47% reported that they had completely
stopped transacting mobile money after the implementation of the new tax.
Therefore, due to this findings it seems that the previous findings support the
current study in a such that, the data provided by UNCDF shows that majority of
72
respondent about 57.4% of high-income respondents started using agent banking while
the study done by whitehead communication revealed that 47% of people had completely
stopped transacting mobile money after the implementation of new tax so due this
variation the consideration of reviewed again the tax must be properly observed well
again in order to make people continue enjoyed the transferring of money.
The study findings revealed the alternatives of sending money to other persons in
order to minimize cost. The study indicates that, of all participants 76.0% agreed that
they used alternatives ways of sending money to other persons in order to minimize cost,
such that 73.7% of them used the alternative of sending the money personally(on foot)
while 31.6% was for all participants who used to send money personally (by car or bike).
These were indicated in table 4.5. The findings supported by the study done by Geofrey
& Mwakangale in Tanzania (2021) on“Vilio Tozo miamala ya Simu” who reported the
same result on the issue of high deductions on mobile money transaction whereby many
people stopped using mobile phones to send money and started travelling to send money
to one location go another in his region at a cost less than 1,000 to avoid such deductions.
In addition the current findings also are in line with the findings of UNCDF
(2021) which revealed that, 38% of respondents they switched to other alternatives such
as agent banking or cash. Some respondents switched back to cash, explaining that, “The
tax is so high that sometimes they have to get a boda-boda (Motorcycle taxi) to deliver
the cash physically”.
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Moreover, the study was supported by the previous study done by UNCDF which
revealed about 38% of respondents they switched to other alternatives and this also
happen to the current study which the variation rate ranges similar but differ in few rate
so the situation seems to be tough because of the high tax so the government should
check on that especially to deduce the tax again.
networking transactions
The researcher wanted to find out Peoples’ perceptions on the imposition of new
value added tax (Tozo) in networking transactions. The table below shows their views in
relation to their Education.
transactions
The research findings revealed about peoples’ perceptions on the imposition of
new value added tax (Tozo) in networking transactions and the respondents were asked
whether it is a good thing to introduce mobile money tax or not in relation to their
education in order to got their perceptions. The current study revealed that 88.0% of all
participants disagreed that it is not a good thing to introduce mobile money taxation but
majority of all participants (32.0%), who disagreed attained university level of education,
followed by 28.0% of respondents attained secondary and 22.0% of respondents had
primary level of education.
These results are supported by the study conducted by Lees et al (2021) who
reported on the public perception of the mobile money tax through a public opinion
74
survey of nearly 3,000 people conducted in the second week of July found that 98% of
respondents did not support or were strongly opposed to the mobile money tax.
Also the current study are in line with the study conducted by Whitehead
Communications (2018) on the public opinion survey on the recent social media and
mobile money taxes in Uganda which revealed when asked respondents whether they
support the mobile money tax, nearly (12) 0% of respondents strongly supported the tax,
(26) 1% of respondents somewhat supported, (25) 1% of respondents were undecided or
neutral, (464) 19% of respondents did not support and (1,970) 79% of respondents
strongly opposed.
Therefore, this implies majority of the people they do not agreed with the
imposition of new mobile money taxation because it seems to be the hindrance thing
especially to entrepreneurs.
5.2.3.2Advantages of the new value added tax (Tozo) in networking transactions
The findings of the study revealed that, 12.0% of all participants agreed on the
advantages of value added tax (Tozo) in networking transactions, such that 100.0% of
respondents said it leads to development of economic sectors followed by 66.7% of
respondents said it leads to development of infrastructure while 50.0% of them said it
leads to the increase of government revenue. The findings supported by the study
conducted by Bankman and Schler (2007) on tax planning under the flat tax in
Washington argued that some countries persist in reducing their value added tax rates for
the purpose of creating an attractive environment for investment, while others are
concerned about increasing tax revenues to provide funding for public services and to
75
assist in reducing public sector deficits. Nonetheless, taxes are needed to generate
revenues so that government can fund social programmers and public investment that
stimulate economic growth and development.
Also this study relate with social political theory which revealed that government
imposing the value added tax (Tozo) in networking transactions so that to achieve the
social objective like to serve the whole society at large especially on constructing health
centers and classroom, and to fund other social projects and all of this were the
advantages which brought by the new tax which have been implemented.
Moreover, despite the deductions still at higher but it seems that, the tax play a
big role on ensuring to generate revenues so that government can fund social
programmers and public investment that stimulate economic growth and development
In analyzing this part, the findings from the study shown that, 88.0% of all
participants agreed that there were disadvantages of value added tax (Tozo) in
networking transactions, such that 84.1% of them agreed that money circulation declines
followed by 65.9% of respondents agreed that it leads to unemployment, while minority
of 11.4% of respondents agreed that it undermines investment. These finding is similar to
study conducted by Syson (2018) who found that the level of taxation and access of
developing opportunities found out that timely transfer taxation affects the opportunities
of development of even small amounts of money can arrest serious declines.
A quantitative and qualitative study done by Harriet (2019) in Uganda which
revealed that, mobile money tax affects the growth of businesses for the agents and the
76
results revealed that 24(58%) of the respondents strongly agreed on that, 11(27%) of the
respondents agreed while 2(5%) disagreed and 4 (10%) of the respondents strongly
disagreed on that.
Also the Survey study supported by whitehead communication (2018) in Uganda
who revealed different effects of the new tax on the livelihoods of the respondents such
as; Delays in conducting business, disrupted payments, general inconvenience, increase
in the cost of doing business, and loss of income.
Again, a survey study conducted by Whitehead Communications (2018) on public
opinion survey on the recent social media and mobile money taxes in Uganda which
revealed that, when respondents were asked about the impact of the new Mobile money
tax on their business. 2,334 respondents offered their answers, which fell into the
following thematic groups such; Delayed payments, general inconvenience, increase in
the cost of doing business, loss of income, reverting to banking and cash payments.
Therefore, due to the current study and the previous study it seems that the
researchers found different advantages for the new tax on mobile money transactions
which tend to occurred so way forward on these was to ensure the reduction of the
deductions.
5.2.3.4 Elimination of new tax (Tozo) on mobile money transactions
The findings revealed that majority of the respondents (66.0%), strongly agreed
that the mobile money transactions taxation should be removed followed by 18.0% of
respondents agreed to remove the mobile money transactions taxation while minority
6.0% of respondents disagreed to remove the new mobile money transactions taxation.
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These findings supported by study conducted by Malanga (2021) in Tanzania who
reported the views of the ACT- Wazalendo leader who said transactions fees were
imposed by the government in the budget for 2021/2022 to facilitate the construction of
classrooms in the country. Recently the government has received funding from the
International monetary fund (IMF) which has been announced to be used to build
facilitates and classrooms across the country. The ACT-Wazalendo leader has advised the
government to reduce or eliminate levies.
Therefore, the researcher supported the point that mobile money taxation to be
reduced or eliminated, this may be helpful to the other system which come up quickly
which will lead to the citizens to remain freely without having any deductions and
continue enjoying the use of mobile money transactions.
5.2.3.5The best source to increase revenue
Respondents were asked to respond to the best source of revenue to be used so
that to increase government revenue. The findings revealed that majority of the
respondents (38.0%), agreed that parliamentary allowances are the best source of revenue
to be used followed by 36.0% of respondents said harvesting of marine resources and
natural resources is the best source while minority of 4.0% of respondents said to
increase tariffs on imports of mobile phones trades is the best one to be used so that to
increase government revenue. These findings supported by the same views from Kaaya a
financial specialist said that typically, taxes are not charged twice on the same product or
services the case with telephone bills, what he said is that the government could collect
taxes from parliamentary allowances, harvesting of marine fisheries and minerals instead
of increasing the burden on the people.
78
Likewise, one among the respondents who provides his views on Jamii forums
(2021) on” Njia mbadala ya Tozo ya miamala ya simu” where he argued that,
government should come up with an ambitious tax collection strategy what the
government could do is that should increase tariffs on imports of mobile phone traders.
By doing so it will be earning a certain amount of money that will help in the
construction of development.
Moreover, due to these findings the researcher also supported on the finding of
other sources of revenue by the government so that to ensure more development rather
than depending on poor Tanzania.
79
CHAPTER SIX
CONCLUSION AND RECOMMENDATION
6.1 Introduction
This chapter presents conclusion and recommendation of the findings of the
research. The main objective of the study was to assess peoples’ perceptions on the
imposition of new value added tax (Tozo) in networking transactions in Nyamagana
District-Mwanza. So in this chapter research gave conclusion on the main objective and
recommendation on possible areas for future and further use of research. In this chapter
the recommendation side will be divided into different categories as we will see in the
relevant section.
6.2 Conclusion
The study conducted with a primary goal of assessing the perceptions of peoples’
on the imposition of new value added tax (Tozo) in networking transactions in
Nyamagana District. The researcher specifically wanted to find out factors influenced the
imposition of new value added Tax (Tozo) in networking Transactions, to study the
citizens networking transactions after the imposition of new value added tax (Tozo) and
last was to find out peoples’ perceptions on the imposition of new value added tax in
networking Transactions.
Then the data was collected by using questionnaire. The questionnaire comprised
questions that distributed to the citizens of Mkolani and the respondents filled being
administered by the researcher herself. Data from questionnaire was coded and analyzed
into a quantitative summary report by using Statistical package of social science (SPSS)
by the aid of computer where data was keyed into program under specific category from
80
which an analysis was run to obtain descriptive statistics in form of frequencies and
percentages.
Then obtained results were about the factors which influenced the imposition of
new value added tax (Tozo) in networking transactions where by respondents stated the
different factors that led to the imposition of mobile money taxation. Different factors
were indicated at table 4.2 in chapter four such as Tax policy weakness, to raise
government revenue, to fund other projects, to construct classrooms and decline in
economy.
Also the researcher study the citizens networking transactions after the imposition
of new value added tax(Tozo) in networking transactions and it justified that majority of
the respondents who affected much on this issue were entrepreneurs, refer to the table 4.3
while others seems to transferring money rarely via mobile network and via bank so as to
reduce cost, refer to the table 4.4. On the other hand others tried to use other alternatives
to send money to other persons personally so that reduce cost, refer to the table 4.5 which
led to the changes of transaction behavior to the citizens at high extent.
Furthermore, the researcher finds out peoples’ views on the imposition of new
value added tax (Tozo) in networking transactions whereby there different perceptions
based on positive and in a negative way. Whereby the positive perception on the
advantages of value added tax (Tozo) were; it leads to development of infrastructure, it
leads to development of economic sectors, as well as it leads to the increase of
government revenue, refer to the table 4.7 while in negative views majority of
respondents said that money circulation declines, inflation of goods and services,
81
deterioration of online business, undermines investment, and it leads to unemployment
refer to the table 4.8. Also majority of respondents provides their views on the
elimination of mobile tax simply because it was revealed that majority of respondents
agreed on that, refer to the figure 4.1 also on the other hand, respondents revealed their
views on what source of revenue to be used by the government so that to increase
revenue whereby majority said parliamentary allowances is the best one followed by
harvesting of marine resources and natural resources as the best source to be used so that
to increase government revenue, refer to the figure 4.2
6.3 Recommendation
6.3.1To government
Due to the findings of the current study it was revealed the views of people
concerned the new tax on mobile money transactions and it shown that many people
needs government to found other source of revenue as well as continued reduced it. The
study recommends that the government should introduce other forms of tax other than the
mobile money tax because it is distorting. Also the mobile money should be at least
reduced to a much smaller percentage and it should be restricted to only bulky
transactions so that the poor who make smaller transactions are not charged.
6.3.2To society
The current study revealed on the way citizens lamenting on the issue of new
mobile money others needs to be eliminated but at the same this tax play a big role on
ensuring more development of the country. The recommendation to the community is
that the community members should be patient and cooperative ones even though the tax
82
rate was higher it’s for the benefit of the whole nation not the government itself so they
should pay that because no one needs to obtain any difficulties in any situation happened.
6.3.3To further studies

The study was relatively small and it is conducted only in Nyamagana district
Mwanza and the sample size was small because the study was unfunded and there was
limited time. So for the further study should be national wide and employ more empirical
research based on perceptions of the mobile money agent's on the imposition of new
value added tax (Tozo) in networking transactions.
83
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89
APPENDIX
St. Augustine University of Tanzania
P.O.BOX 307
Mwanza
10th may, 2022
Qn. No
Date 2022
A QUESTIONNAIRE OF MKOLANI CITIZENS ABOUT PEOPLES’

PERCEPTIONS ON THE IMPOSITION OF NEW VALUE ADDED TAX (TOZO)
IN NETWORKING TRANSACTIONS.
I am Stella Abel Nkungu, a student of St. Augustine University of Tanzania pursuing a
degree in Bachelor of Arts in Sociology. Currently am carrying out a research on
peoples’ perceptions on the imposition of new value added tax(Tozo) in networking
transactions; case study of Mkolani ward at Nyamagana District-Mwanza. This study will
enable the citizens’ to determine exactly what kind of tax to be paid as well as the amount
of money to be paid depending on the value of each transaction. Also citizens’ will be
able to know exactly how do that paid tax has been used in what kind of activities so
through that they will be able to capture all the matters concerning the new one tax
(Tozo) in networking transactions.
You’re among the randomly selected participants to involve in this study. So, I kindly
request you to respond to the questions in the questionnaire based on demographic
characteristics of respondent, factors influenced the imposition of new value added tax
(Tozo) in networking transactions, citizens’ networking transactions after the imposition
of new value added tax (Tozo) in networking transactions and peoples’ perceptions on
the imposition of new value added tax in networking transactions. I assure that the
information you provide will be strictly used for academic purposes and all the answers
will be handled with utmost confidentiality. I give my thanks in advance believing that
you will assist me to accomplish this study.
SECTION A: DEMOGRAPHIC CHARACTERISTICS OF RESPONDENT.

Please respond the following questions by circling the right option.
A1. What is your Age?
(1) 18-30 years (2) 31-40 years (3) 41-50 years (4) 51 and
above
A2. Gender
90
(1) Male (2) Female
A3. Marital status
(1) Single (2) Married (3) Divorced (4) Widow
A4. Occupation
(1) Doctor (2) Teacher (3)Entrepreneur (4) Engineer
(5)Driver (6) Other, specify ……………
A5. Education
(1) Never attained formal education (2) Primary (3)Secondary
(4) High school (5) University
A6. Religion
(1) Muslim (2) Christian (3) African Tradition Religion (ATR)
(4) other, specify………
SECTION B: Factors influenced the imposition of new value added tax (Tozo) in
Networking Transactions.
B7. How do you understand by the term value added tax (Tozo) in networking
Transactions? (Respond by circling the appropriate option)
(1) Very well (2) Moderate (3) Don’t understand
B8. The following factors said to influence the imposition of new value added tax (Tozo) in
networking transactions. Please tick appropriately on the following statements (Multiple answers
are allowed).
FACTORS Strongly Disagree Neither Agree Strongly

Disagree (2) Agree nor (4) Agree (5)
(1) Disagree (3)
B8-1 Decline in economy
B8-2 Tax policy weakness
B8-3 To construct class rooms
B8-4To fund other projects
B8-5 To raise government
revenue
SECTION C: Citizens networking Transactions after the imposition of new value
added tax (Tozo) in networking Transactions.
C9. Do you have a mobile phone?
(1) Yes (2) No
C10. To what extent does the imposition of new mobile money taxation change your
mobile money transaction?
(1) High extent (2) Moderate (3) Low extent
C11. How often do you transfer money via mobile network?
91
(1)Very often (2) Often (3) Rarely (4) Never
C12. How often do you transfer money via bank in order to minimize cost?
(1)Very often (2) Often (3) Rarely (4) Never
C13. Have you ever used the following alternatives to sent money to the other person in
order to minimize cost? (Respond by putting a tick in the appropriate option)
YES NO
C13-1 Send the money personally (on foot) ( ) ( )
C13-2 Send money personally (by car or bike) ( ) ( )
C13-3 Hire a taxi driver or bike to send the money. ( ) ( )
SECTION D: Peoples’ perceptions on the imposition of new value added tax (Tozo)
in networking transactions
D14. Do you think it is a good thing to introduce a new tax on mobile money transaction?
(Please respond the following question by put a tick in the right option).
1. Yes ( )
2. No ( )
D15. If Yes in D (14) above, among the following, what could be the advantages of the
new tax on mobile money transactions? (Multiple answers Allowed). (Please respond the
following questions by put a tick in the appropriate option)
D15-1It leads to development of infrastructure ( )
D15-2It leads to development of economic sectors ( )
D15-3It leads to the increase of government revenue ( )
D15-4It helps to reduce crimes ( )
D15-5 It helps to reduce income inequalities ( )
D16. If No in D (14) above, among the following, what could be the disadvantages of the
new tax on mobile money transactions? (Multiple answers allowed)
D16-1Money circulation declines ( )
D16-2Inflation of goods and services ( )
D16-3Deterioration of online business ( )
D16-4 Undermines investment ( )
D16-5 It leads to unemployment ( )
D17. Please indicate the level of agreement in the following statement by put a tick in the
appropriately option. The new tax (Tozo) on mobile money transaction should be
eliminated?
1. Strongly agree ( )
2. Agree ( )
3. Undecided ( )
4. Disagree ( )
5. Strongly disagree ( )
92
D18. Among the following sources of government revenue which one is the best to use so
that to increase revenue rather than depend on poor Tanzanian. (Please respond the
following question by put a tick in the appropriate option)
1. Parliamentary allowances ( )
2. Harvesting of marine resources and natural resources ( )
3. Increase tariffs on imports of mobile phone traders ( )
4. Administrative revenues(Fines and Penalties) ( )
5. Public debt (Borrowings of the government from different financial services such
as central bank, commercial bank and business organization( )
93

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St.

Augustine University of Tanzania (SAUT)

Faculty of Social Sciences and Communication

NKUNGU, Stella Abel

the St. Augustine University of Tanzania a dissertation entitled “An assessment on

transactions” in partial fulfillment of the requirements for award of the Bachelor of

Mr. MDUGE Alfani, C.

transmitted in any form by any means, electronic, mechanical, photocopying, recording

University of Tanzania in behalf”

© Stella Abel Nkungu, 2022

Also, I express my special gratitude toward my research supervisor Mr. Mduge

to provide necessary information and correction despite his many responsibilities as a

Lastly, I express my special thanks toward the department of Sociology at SAUT

third year may God bless you all.

Definition of the Key Term............................................................................................xiv

CHAPTER ONE: GENERAL INTRODUCTION..........................................................1

1.2 Background of the study................................................................................................1

1.3 Statement of the problem.............................................................................................11

1.4 General Objective........................................................................................................13

1.4.1 Specific Objectives............................................................................................13

1.5 Research Questions......................................................................................................13

1.6 Significance of the study.............................................................................................14

1.6.1The Citizen of Tanzania.....................................................................................14

1.6.3 The other Researchers.......................................................................................14

1.7 Scope of the study........................................................................................................14

1.8 Limitations of the Study..............................................................................................15

CHAPTER TWO: LITERATURE REVIEW...............................................................17

2.2 Theoretical review.......................................................................................................17

2.2.1 The social-political theory.................................................................................17

2.2.2 Benefit-received theory.....................................................................................19

2.3 Empirical literature review..........................................................................................21

(Tozo) in networking transactions..............................................................................25

2.4 Research Gap...............................................................................................................44

CHAPTER THREE: RESEARCH METHODOLOGY...............................................46

3.2 Research Approach......................................................................................................46

3.4 Area of the Study.........................................................................................................47

3.5 Population, Sample, and Sampling Technique............................................................49

3.5.1 Target population...............................................................................................49

3.5.2 Sample Size.......................................................................................................49

3.5.3 Sampling Technique..........................................................................................50

3.6 Data Collection Method...............................................................................................50

3.7 Data Analysis Strategies..............................................................................................52

3.8 Ethical Consideration...................................................................................................52

CHAPTER FOUR: RESEARCH DATA FINDINGS...................................................54

4.2 Research Findings........................................................................................................54

4.2.1 Demographic information of the Respondents..................................................54

(Tozo) in networking Transactions.............................................................................57

4.2.3.4 Elimination of new tax (Tozo) on mobile money transactions......................62

4.2.3.5 The best source to increase revenue...............................................................63

CHAPTER FIVE: DISCUSSION OF THE FINDINGS..............................................65

(Tozo) in networking transactions..............................................................................69

5.2.3.5 The best source to increase revenue...............................................................78

CHAPTER SIX: CONCLUSION AND RECOMMENDATION................................80

6.3.3To future studies........................................................................................................83

Table 4.1: Demographic information of respondents........................................................55

Table 4.3: Changes of mobile money transaction and occupation....................................57

Table 4.7: Advantages of value added tax (Tozo) in networkingTransactions.................61

Table 4.8: Disadvantages of value added tax (Tozo) in networkingTransactions………61