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 Regulation, Taxation: Financial analyst Deloitte has revealed the
countries whose rates of taxation, direct or indirect, on mobile communications
are the highest in the world. Heaviest tax is in Turkey, where the taxation rate
as a cost of mobile ownership is over 2.5 times the global average. Deloitte’s
report, commissioned by the GSMA, is summarised in this critical review...
The GSMA’s enthusiasm for low-tax regimes as method of
boosting mobile ownership and thus in turn boosting economic growth, is well
known. Latest chapter in the Association’s campaign is the publication of a
report it recently commissioned from worldwide financial analyst and
accountancy practice Deloitte. Developing Telecoms is now publishing the
survey’s top ten “roll of shame.”
Deloitte’s study reinforces previous GSMA research, which
concludes that in a developing country an increase of 10 percentage points in
mobile penetration will lift that country’s annual economic growth rate by 1.2
percentage points. For example, if the proportion of people in an economy with
a mobile phone grows at 4% a year, then rises from 10% to 20% will boost the
economic growth rate to 5.2% a year.
One phenomenon noted by Deloitte in 16 of the 101 countries
reviewed is that a mobile phone is regarded as a luxury item - this despite the
proven empowerment that mobile communications can bring. Tom Phillips, the
Chief Government and Regulatory Affairs Officer of the GSMA is quick to support
Deloitte: “Taxing mobile services and handsets as if they are caviar or
champagne is counterproductive...This study adds to the growing weight of
evidence that growth in mobile services is a fundamental requirement for
economic growth, delivering swift and efficient communications. Governments
should recognise this and adjust their tax policies to encourage, rather than
constrain, mobile usage.”
As mentioned earlier Deloitte has compiled a list of the
ten leading offenders. The breakdown is strange in that one country leads the
rest of the pack by a long way but those left in the “leader’s” wake are from
two totally unconnected regions.
And the top offender? Well, despite the country’s healthy
economic growth overall, it’s Turkey,
where 44% of the cost of owning a mobile phone is due to taxes. In fact, Turkey
leads the way by a long margin in global and to some extent regional terms.
Following Turkey in
second place is Tanzania, where taxes make up 29.4% of ownership costs. East Africa provides three of
the six worst offenders, as Uganda
follows in third place with a close 29.2% and Zambia
comes in sixth with 26.4%.
And if East Africa appals you, then you only have to look at Central and South America. Brazil
taxes at 28% in fourth place, Dominican Republic takes 26.3% (7th), Ecuador
26.2% (8th) and Argentina makes up the top ten at 25.3%
If you do wish to escape from Turkish taxation tyranny, you
will be wasting your time crossing the Black Sea to Ukraine (26.7%, 5th) or
negotiating the border with Greece: the messenger of the gods, Hermes, would
not just have to sacrifice an animal to Zeus but also (9th place) in tribute to
the Athenian authorities.
The GSMA also revealed that twenty states impose higher
taxes on mobile communications than they do on fixed communications even though
the United Nations, the World Bank and other international development
organisations regard mobile communications, not fixed, as the most
cost-effective way to connect people in the developing world.
“We believe that any taxation policy should be designed in
a way that does not add any further barriers to access and add to the cost of
service provision for the poor,” said Mohsen A Khalil, Director of Global
Information and Communication Technologies, World Bank. “The indirect benefits
to the economy of having affordable access to telecommunications services far
outweigh any short-term benefit to the budget.”
Deloitte partner Dennis Knowles added: “We would urge
Governments and mobile operators to work together to determine the economic
impact of the sector, the ideal tax mix and how these combine to meet the
objectives of the country.”
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Date: 1-3 September 2008