Africa's Mobile Industry to Pay US$71 Billion in Tax By 2012
The mobile industry will generate US$71 billion in tax revenues in Sub-Saharan Africa between 2000 and 2012, but that figure would be higher still if governments removed taxes that treat mobile phones and services as luxury goods, according to research commissioned by the GSMA. The research by Frontier Economics found that uptake of mobile services in the region is being held back by mobile-specific taxes on handsets, airtime and telecom equipment, which increase costs for consumers and deter investment by mobile operators.
If all mobile specific-taxes in Sub-Saharan Africa had been removed in 2007, an additional 43 million people in the region would be connected by 2012 leading to an increase in overall tax receipts of $930 million between 2007 and 2012, according to the research.
"Mobile consumers in Africa face some of the highest tax rates in the world which hit poorer members of society hardest," said Gabriel Solomon, Senior Vice President at the GSMA, the global trade body for the mobile industry. "These taxes are holding back mobile adoption in Africa, curbing economic growth and, ironically, are actually lowering the total revenues collected by governments."
The research found that the mobile industry in Sub-Saharan Africa employs more than 3.5 million people directly or indirectly and, in 2006, contributed an average of 4% to African countries' Gross Domestic Product (GDP). The GSMA announced in October that mobile operators plan to invest approximately $50 billion in sub-Saharan Africa over the next five years. The report estimates that every dollar the mobile industry invests in Africa generates an average of US80 cents in taxes.
Frontier Economics calculates that the mobile sector accounts for 7% of total government revenues in the region.
"We do not believe that taxation should be designed on the basis of short-term considerations - it should be designed on the basis of achieving the best long-term economic interests for the society and in a way that accelerates the extension of services to the poor," added Mohsen A. Khalil, Global Information and Communication Technologies Director at the World Bank. "The indirect benefits to the economy of having affordable access to telecommunications services far outweigh any short-term benefit to the budget."