Developing Telecoms | ICT policy goals must be reflected in taxes to drive mobile broadband adoption

9 February 2012

Industry News

LATEST NEWS:

Broadband collaboration aims at emerging markets MTN extends managed services partnership with Ericsson in Ghana Indian Handset Market Witnesses 14.1% Growth in 2011 Network planning partnership to cover Southeast Asia Open framework boosts service delivery for Israeli operator Kosovan contract renewed for emerging markets provider Indian startup reneges on terms of infrastructure agreement Carrier grade Wi-Fi base stations enable connectivity in Ouagadougou Slow progress in Nepal, but penetration exceeds expectations First 4G-LTE network goes live in Hungary BSS transformation contract underway in Malaysia Mobile number portability set to shake up Chile’s mobile market South Africa, Nigeria, Kenya, Egypt and Morocco lead Tweeting in Africa Enthusiastic response to Tanzania’s first voice SMS service New platform allows fast uploading for Thai news reporters 3G growth healthy in Belarus as mobile market nears saturation Global top up service for Chinese expatriates Subscriptions on the rise in Kuwait over 2011 Free mobile access to Wikipedia for Africa & ME customers Political risk throughout North Africa may temper short-term growth RCom receives loan from Chinese banks Emergency communications terminals deployed in South Sudan Digital wallet services launching in China A strong 2011 for Ghana with more growth to come First Israeli-owned high-speed cable system goes live Indian government loses tax case to Vodafone Subscriber growth and LTE painting a pretty picture for UAE market 3G forecast looks rosy in China Partnership agreement expands satellite operations in Africa and Middle Eas... Rising penetration rates in Iran could be misleading Copper-Alternative Grounding Wire targets infrastructure theft OSS update for newest Thai operator Muscovites to receive modernised network

ICT policy goals must be reflected in taxes to drive mobile broadband adoption

Monday, 26 July 2010 15:19 | James Barton

Attention: open in a new window.

A Telecom Advisory Services (TAS) report delivered in conjunction with the GSMA has revealed how mobile sector-specific taxation is impacting on the development and deployment of Mobile Broadband in developing countries. The study indicates how a reduction in special taxes applied to the telecommunications sectors in countries with different taxation approaches like Brazil, Mexico, Bangladesh and South Africa will translate into higher Mobile Broadband service adoption and more wealth creation reflected in additional GDP growth.

Inconsistencies currently exist in many developing countries between the levels of taxation levied against the Mobile industry and the reliance each of these countries place on Mobile Broadband to achieve broadband penetration goals. With a widespread absence of fixed infrastructure in these markets, Mobile Broadband will become a key social and economic development lever, driving internet connectivity and bridging the existing digital divide. As revealed in the report, every dollar reduced in taxes across Brazil, Mexico, Bangladesh and South Africa will generate additional GDP ranging between US$1.4 to US$12.6 through enhanced broadband uptake. Despite this however, all four countries have implemented a taxation approach that actively reduces Mobile Broadband penetration by putting an economic burden on the purchase of handsets and services.

“The report’s findings clearly show how distortive taxation approaches in some countries can increase the Total Cost of Mobile Ownership (TCMO), negatively impacting development of Mobile Broadband,” said Tom Phillips, Chief Government and Regulatory Affairs Officer at the GSMA. “This report highlights the inconsistencies between regulations aimed at developing ICT sectors and policies that single out the services they deliver as “cash cows” upon which taxes are levied.”

The study authored by renowned experts Dr. Katz, Dr. Flores-Roux and Dr. Mariscal states that at least twenty-seven countries around the globe have special taxes focussed on telecommunications services. While it is imperative that governments apply taxes to finance spending and generate externalities in sectors where private investment is lacking, these taxation models are often extremely inefficient. Fiscal policies that apply a special tax to the telecommunications sector cause distortions that “crowd out” private spending and ultimately diminish welfare.

“It is crucial that policy makers in these countries understand the impact Mobile Broadband will have on wealth creation, and align their ICT development strategies to sustain its ongoing growth”, said Mr. Phillips.

More info:

Tags: