ITU to govts: Lower telecoms taxes for affordable Internet

The International Telecommunications Union (ITU) has appealed to governments in developing countries, including Nigeria, to lower taxes targeted at telecommunications sector.

The United Nation’s arm in charge of telecommunications said this was the only way the countries could achieve affordable internet access for the people.

Nigeria is one of the countries in Africa where cost of internet is still high and above the threshold recommended by the global body for affordability.

The operators have, however, been battling with issues of multiple taxation for years, thus justifying their charges. According to ITU’s specification, cost of one gigabyte (GB) of data, must not be more than two per cent of monthly gross national income per capita to be termed affordable.

The body, in its latest report titled ‘The State of Broadband: Broadband as a Foundation for Sustainable Development,’ observed that many developing countries in Africa currently have high and multiple tax regimes that make affordable broadband internet access impossible. 

“Sector-specific telecommunications taxes, fees and other levies have a significant impact on affordability of ICT services and lead to a reduced take up of broadband. Research has also demonstrated that sector-specific taxes can have a counterproductive effect, reducing overall tax intake because of slowing economic growth and reduced investment,” ITU stated.

Citing Uganda as a case study, ITU said the introduction of a new tax on mobile money in the country in 2018 had immediate negative impact on the mobile money business, with the value of P2P transactions declining by 50 per cent within two months of implementation.

“100,000 agents saw their earnings drop by around 35 to 40 per cent and 30,000 went out of business completely. Such taxes are likely to deepen digital inequality between the rich and the poor and tend to particularly impact women’s ability to access the internet,” the body said.

ITU said the target for developing countries was to achieve broadband affordability of 1GB at less than two per cent of monthly gross national income (GNI) per capita by the year 2025.

This, it said, would help to connect the remaining 49 per cent of the world’s total population who are yet to be connected.

Similarly, ITU said it had also set a target of ensuring that by 2025, 40 per cent of the world’s population should be using digital financial services.

It added that digital financial services present a tremendous opportunity to swiftly increase the number of people using broadband and the internet and to realising some of the social and economic benefits of these digital resources.

“Currently, two billion adults are still without access to a bank account, but some 1.6 billion in this group have access to a mobile phone, presenting the opportunity to explore strategies that leverage the widespread use of mobile phones as platforms for financial inclusion,” it stated.

On smart device ownership in Africa, ITU noted that recent consumer survey suggested that affordability, particularly the cost of a device, is the biggest barrier to mobile ownership followed by literacy and skills.

“When considering handset prices in US dollars, the median price in low- and middle-income countries since 2016 has been just over $45; in South Asia and Sub-Saharan Africa, it has been slightly less at $35-40.79 Several efforts are underway, however, focusing on reducing the cost of entry level smartphones, or similar such devices to price points closer to $20,” it said.

Source: New Telegraph