Tanzania's government had suspended a new tax that came into effect at the start of this month which had seen mobile phone users charged Sh1,000 (US$0.62) per month per SIM Card.
The tax was expected to raise around US$130 million a year, for rural infrastructure developments, but was fiercely opposed by customers, forcing the government climb-down.
Finance Minister Dr William Mgimwa announced the u-turn saying that the government will consult again based on the complaints and may revise the tax if it is resumed.
"We are not about to start charging the introduced tax because we are still working with the system as we don't want to harm the community," Mgimwa said at a press conference.
The biggest complaints about the new tax had come from the rural poor, who often spend less per month than the tax would have charged, effectively more than doubling their monthly phone costs.
The government does however face a problem with a very low tax base and high evasion -- while a tax on mobile phone services would be much harder to avoid paying.
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