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Why we need a new approach towards taxation of data and ICT services in Africa

This post was written by Eleanor Sarpong, Deputy Director and Policy Lead, A4AI. Follow Eleanor on Twitter @Ellasarpong.

As leaders and players in the telecommunications industry converge in Kigali for GSMA’s Mobile360 Africa conference this week, it’s time to reflect on the impact of taxation on African consumers and advocate for policy makers to take an approach that considers multiple views and insights and that is grounded in evidence to address this issue.

It is critical that the conversations in Kigali bring together a multitude of voices from the industry. If we are talking about the future of taxation in a digital world, we must engage those beyond just the mobile operators — including content providers, platforms, consumer groups, and civil society organisations. 

We are calling for a wider conversation to take place on taxation, one that places the focus squarely on those most negatively impacted by the results of these decisions: the users. In order for us to close the digital gap and achieve digital equality, the issue of taxation must be dealt with in a holistic, dispassionate, evidence-based manner. 

A holistic approach is particularly important and necessary in attaining the UN Sustainable Development Goal 5 on gender equality and Goal 9c on ICTs and universal internet access, both key to the discussion around taxation.  

A4AI, the leading global advocate for affordable broadband, will be speaking at this event highlighting the need for a critical look at slowdown in access as well as the impact of consumer facing taxation — both affecting citizens ability to connect. 

A4AI’s recent mobile broadband pricing update shows that Africans face the highest cost to connect to the internet — just 1GB of mobile data costs the average user in Africa nearly 9% of their average monthly income. The reasons for this include a slow down of policy improvements in access and infrastructure. 

While governments must of course raise revenue to deliver public services, we argue that any interventions in the ICT sector should be designed to support economic growth and social inclusion. 

Our recent research findings have shown that:

  • An assessment of the impact of social media tax can prove beneficial for governments prior to tax implementation. These holistic assessments can demonstrate that the taxes may in fact decrease internet use and have negative spillover effects on the economy as a whole.
  • Governments must pay particular attention to the impact taxes have on women and other groups who are traditionally excluded from digital spaces. The ability of people to pay the taxes depends largely on their socio-demographic status. The taxes are therefore likely to deepen digital inequality between the rich and the poor. In addition, one of the main barriers keeping many women offline is skills. The taxes are likely to exclude those who could most benefit from the ease of use of select services, widening the digital divide between those with and without digital skills.   

To prevent the digital divide from growing starker, telecommunications industry leaders and players, from regulators, entrepreneurs, investors to CSOs, must consider the impact of these taxes on the bottom income earners, especially women, who are hit in a considerable fashion.  

By focusing on a multistakeholder and consultative approach to tackle this issue, policy makers, industry players and civil society can collectively have a hand in shaping regulation for the future of improved connectivity rates and increased innovation. 

For more updates on our work, follow us on Twitter at @a4a_internet.